Sales dip again but H&M still proving relatively resilient

Published on Monday 17 November 2008 21:01

EUROPE'S No 2 clothing retailer, Hennes & Mauritz, has reported a third month of falling sales, writes Scott Reid.

But the decline was not as great as analysts had feared, raising hopes that the group's focus on low-cost clothing would help shield it from the high street slowdown. The firm, better known as H&M, said sales at stores open at least a year dipped 2 per cent in October compared with the same month last year – the third consecutive monthly fall. On average, analysts had been expecting a 2.8 per cent drop.

Shares in the Swedish fashion group have performed relatively well in recent months, with the company's modest pricing and geographic spread making it more resilient to the downturn than many.

Mid-market UK rivals Marks & Spencer and Next have suffered much steeper falls in underlying sales.

H&M said total sales for the month, which factor in new store openings, were 9 per cent higher from a year earlier, against a forecast of a 9.1 per cent increase.

Anders Wiklund, an analyst at Evli Bank, said: "I think the figures were good. H&M continues to do better than the market, just like the low price segment is expected to do right now."

H&M sources about two-thirds of its items from Asia, where labour costs are rising.