H&M’s sales growth is slowing due to the war in Ukraine


Hennes & Mauritz (H&M) reported a sudden slowdown in sales growth and was one of the first retailers to signal how the war in Ukraine is weighing on consumption.

Ales rose 6 percent in local currencies in March, compared with growth of 23 percent in the three months to February, H&M said on Thursday. Shares fell as much as 3 percent in morning trade.

War and a Covid resurgence in China are weighing on the retail outlook, making the recent recovery short-lived.

H&M has suspended sales in Russia, its sixth largest market, which accounts for about 4 percent of total sales. H&M closed 227 stores on Wednesday, mostly in Russia, Belarus and Ukraine.

Excluding these three countries, revenue rose 11 percent in March.

Pre-tax profit reached 282 million kroner ($30 million) in the three months to February, well below the average analyst estimate of 1.05 billion. H&M said greater investments in technology and the supply chain have weighed on profits.

H&M’s inventories started piling up in 2016, and the retailer is still struggling to bring down levels that surpass $4 billion. It rose to 18.9 percent of 12-month sales from 18.7 percent at the end of November. According to H&M, about a sixth of the stock is held to mitigate delays in the supply chain.

The retailer increased its target for net store closures this year to 145 stores, up from 120 previously. H&M’s contracts stipulate that a third of the leases are renegotiated every year. H&M’s sales growth is slowing due to the war in Ukraine

Fry Electronics Team

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