© Reuters. FILE PHOTO: The H&M clothing store is seen in Times Square in Manhattan, New York, U.S., November 15, 2019. REUTERS/Mike Segar/File Photo
STOCKHOLM (Reuters) -Swedish fashion retailer H&M (ST:) on Friday reported a slightly larger-than-expected drop in September-November sales measured as the company aims to prioritise profitability.
Sales measured in local currencies fell 4%, again analysts’ expectations of a 3% decline.
However, the sales figure showed an improvement on the 10% fall H&M warned of for September, when unusually warm weather hurt sales of autumn/winter collections across the apparel sector.
The 4% decline for the quarter likely reflects a return to colder weather in October and November, Jefferies analysts said.
The world’s second-biggest listed fashion retailer after Inditex (BME:), H&M has been prioritising its profit margin over sales, as it aims to reach an operating margin of 10% in 2024.
H&M has been losing ground to Zara owner Inditex, which on Wednesday reported a 15% rise in local-currency sales for the nine months through October, and a 14% rise for the following six weeks.
H&M shares have outperformed Inditex this year, though, up around 56% as investors bet on the company’s ability to bounce back after inflation dented its profitability.
H&M was slower to raise its prices than Zara, as its customer base is, on average, more price-sensitive.
But this year, price increases helped it raise its operating margin to 5.9% for the first nine months of its financial year from 3.9% over the same period last year.
In Swedish crowns, net sales for the quarter were roughly unchanged at 62.6 billion crowns ($6.10 billion) against a mean forecast of 63.2 billion.
H&M is scheduled to release full-year results on Jan 31.