H&M results are a tail of two halves
Robyn Duffy, Consumer Markets Senior Analyst at RSM UK, comments on H&M’s half-year results: “H&M's results are a tail of two halves. Soft demand is causing weak revenues, but improving operational execution is delivering positively for profitability.
“With Q2 hit squarely by the crisis in the Middle East, a trough in consumer confidence during the period dented demand, particularly across parts of Europe. But profitability is seeing an encouraging improvement. Supply chain refinements, tighter cost control and favourable currency movements are helping protect margins, despite a subdued trading environment. That suggests efforts to improve efficiency are beginning to bear fruit, even if the sales environment remains challenged.
“The bigger question is whether H&M can turn better execution into stronger sales. Improving the supply chain is one thing, but persuading consumers to choose H&M more often is another. The retailer has been investing heavily in design, trend relevance and getting products to market faster, but changing perceptions doesn't happen overnight. Replicating even part of the success Inditex has achieved through its fast-moving model would be a major win for H&M.”