2Q18 Sales Update

Swedish fashion retailer H&M reported that total sales growth was flat in constant-currency terms in the second quarter ended May 31, 2018. Sales excluding VAT grew by 1.2% in reporting currency to SEK 51,983 million, slightly behind the consensus estimate of SEK 52,627 million. Sales including VAT grew by 2.0% in reporting currency to SEK 60,464 million. The total number of stores grew by 6.7% year over year to 4,801, as of the end of the period. Compared to the solid growth in store numbers, the sales performance was weak once again—in the previous quarter, store numbers grew by 8.0%, while sales growth was flat in constant currency. The retailer has been making efforts to advance e-commerce sales, and these accounted for 13% of total sales in its most recent fiscal year. H&M recently announced that it is developing two new technologies: a Google Assistant application called H&M Home Stylist that will provide personalized styling suggestions through voice commands, and an AR application that will allow shoppers to view holograms of Monki clothing using smartphones and tablets, as if they are being presented in the shoppers’ homes. H&M did not provide further information on sales performance during the quarter, unlike in previous trading update releases. The company noted that the above sales figures are provisional and may deviate slightly from the six-month report it will publish on June 28, 2018.