H&M sees January sales stall

Clothing retailer Hennes & Mauritz today blamed the timing of New Year for its worst sales performance in 15 months.

H&M revealed that worldwide sales rose only 5% in January – a sharp slowdown on the 13% growth of the previous month and below the consensus expectations of analysts.

In an update on trading, the Swedish retailer said “calendar effects” had reduced sales as New Year fell on a Saturday.

In addition, there were five Sundays last month compared with 2004 and this particularly hurt H&M as stores are not allowed to open in Germany – its largest market with around 270 branches – on that day.

Analysts said the figures were poor and pointed out that the addition of new space would have contributed around 13% of the growth in turnover.

According to the research team at broker Dresdner Kleinwort Wasserstein, like-for-like sales probably declined by 3% despite undemanding comparatives and virtually no price deflation.

Tony Shiret, of broker CSFB, said: “We believe that H&M is reaching the end of a period when it has benefited from a number of benign conditions allowing it develop its gross margin.”

H&M last month reported a 15% jump in annual pre-tax profits to 11.01bn Swedish kronor (€1.2bn) and turnover of 53.7bn Swedish kronor (€5.9bn) following a strong end to the financial year.

It plans to open 155 stores worldwide by November, including one in Ireland.