Second world largest apparel retailer, Hennes & Mauritz AB, reported upbeat sales figures for August and the whole third quarter, boosting the company’s stock to a new all-time high and easily surpassing market estimates.
The Swedish company’s sales in local currencies increased 19 percent on an annual basis in August, while sales for the third quarter ended August 31st were up 16 percent from a year ago at 45.259 billion Swedish kroner.
Despite the noticeable improvement, H&M still lags behind Inditex by annual sales, but last month it took its rival on Inditex in its home market with its first Spanish online store, recalled ‘CITY A.M.’
“Strong momentum continues,” Simon Bowler, an analyst at Exane BNP Paribas, said in a note to investors.
“Whilst this will be positive for sentiment, it is important to understand the cost shape driving this sales momentum. We fear gross margin weakness will be a risk at the third-quarter results, as tough comparatives across the second half expose the margin pressure from an increasingly competitive value market,” concluded Bowler.
The preliminary report also pointed at a 13 percent increase in the number of stores operated by the company. H&M’s complete third-quarter report is due on September, 25.
On the wake of the news, the stock gained 2.64 percent at midday, to trade at the all-time high of 310.70 Swedish kroner, valuing the company at 453.6 billion Swedish kroner.
As show by data gathered by the ‘Financial Times’, 28 analysts offering 12-month price targets for H&M Hennes & Mauritz AB have a median target of 312.50 Swedish kroner, with a high estimate of 400 Swedish kroner and a low estimate of 185 Swedish kroner.