H&M to offer more discounts as it battles to revive sales

By Marie Mannes

STOCKHOLM (Reuters) - H&M plans to offer more discounted fashions in the second half of this year as it tries to win back customers from the likes of Zara owner Inditex and Shein.

H&M has over the past year or so said it was prioritising profitability over sales volumes in order to reach a 10% operating margin goal, one it hopes to achieve this year.

But this has come at a cost in terms of market share, and in March the Swedish retailer said it was shifting focus to boosting sales to keep up with the competition.

On Thursday, H&M said external factors - such as material costs and currency moves - were making the 10% margin goal more difficult to reach this year, and that it needed to ramp up sales growth to get there.

Chief Executive Daniel Erver told Reuters it was vital for sales to pick up in the remaining two quarters of the year.

"If we see a weak sales development in the third quarter it will be very difficult to achieve," he said in an interview.

H&M, which lists summer dresses for as little as $9.99 on its website and jeans starting at $19.99, plans to boost sales by offering more discounts in the second half of the year, Erver told analysts on a call.

"We're ... guiding for slightly higher reductions (in prices) because we see a need to activate the customers," he said.

"We want to get people more re-excited about H&M ... so discounting is one way, but of course creating exciting collections, experiences and events are another," he added.

(Reporting by Marie Mannes; Editing by Mark Potter)