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H&M sales grow 23% in first quarter

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·Finance Reporter, Yahoo Finance UK
·2-min read
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H&M
H&M is temporarily suspending all sales in Russia due to the invasion of Ukraine. Photo: Vlad Karkov/Getty

H&M (HM-B.ST) reported a 23% rise in first quarter sales even as the Swedish retailer reduced the level of markdowns on its garments.

The world’s second biggest fashion retailer said that sales for the quarter ending in February increased by 23% year-on-year to 49.17bn Swedish krona (£3.93bn, $5.12bn), while net sales in local currencies rose by 18%.

Read more: H&M to close 240 stores as it cuts 2,950 jobs

The retailer said earlier this month it would temporarily close its stores in Russia, joining a growing list of international brands exiting the country following its invasion of Ukraine.

The business has about 4,800 stores globally, of which around 150 are in Russia, making it H&M’s sixth largest market. In the last quarter alone, Russia accounted for 4% of group sales.

The fashion giant has recently been expanding its presence in Russia, including opening shops under other brand names in its portfolio such as Weekday and & Other Stories. Russian shoppers can usually also order clothes from the brands Monki and Cos online.

Stores in Ukraine were also closed for the safety of customers and employees.

In an official statement, the Swedish retailer said it stands "with all the people who are suffering".

Read more: Primark sales set to surge 60% as lockdown fades

Credit Suisse said in a note the figures implied a slowdown in local-currency sales growth to around 14% in February, from the around 20% flagged previously for December-January, Reuters reported.

Shares were down 2.5% in early trade as analysts focused on the potential impact of the Ukraine crisis on its business in Central and Eastern Europe. The stock has declined 18% this year.

The stock declined 2.5% this Tuesday. Chart: Yahoo Finance UK
H&M stock declined 2.5% on Tuesday. Chart: Yahoo Finance UK

RBC analyst Richard Chamberlain said he had cut profit estimates for H&M for this year and next by around 10%, pointing to the Russia store closures but also the fact that Central and Eastern Europe account for some 12% of group sales.

The company will publish its three-month report on 31 March 2022.

Watch: The risks of buying now and paying later

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