Hennes & Mauritz raised hopes of recovery in the European retail sector on Thursday with a better-than-expected 45 per cent rise in first-quarter net profits.
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The Swedish fashion retailer said the strong results came in spite of continued economic weakness during the December-February period but it reported signs of improvement in the market at the start of the second quarter.
Like-for-like sales declined slightly in February but rose 2 per cent over the quarter, after gains in December and January.
March same-store sales were up 9 per cent – beating analysts’ expectations and raising hopes of a strong second quarter.
H&M, the world’s third-biggest clothes retailer after Gap of the US and Inditex of Spain, suffered seven consecutive months of like-for-like sales declines before last December as the retail market suffered its deepest downturn for years.
But the robust first-quarter results and strong start to the second quarter will increase optimism that the company and market has turned the corner. Shares in H&M have risen by about a fifth this year and by about 40 per cent over the past year in anticipation of a turnround.
The Stockholm-based company generates a quarter of its sales in Germany but has increasingly sought fresh growth outside Europe in the US and Asia.
Quarterly net profit was SKr3.74bn ($514m), up from SKr2.58bn a year earlier. Revenues rose 6.6 per cent from SKr23.3bn to SKr24.8bn.
”In view of the continued weak economy during the quarter, the company considers that sales have been satisfactory,” H&M said in a statement.
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