H&M struggles as late Black Friday and shipping issues hit sales

H&M, a prominent global fashion retailer based in Sweden, experienced a setback in sales during its quarterly results, which were reported on January 30, 2025. The company revealed that its sales for the three months leading to November 30, 2024, amounted to SwKr62.2 billion, falling short of analyst expectations that pegged sales at SwKr63.5 billion. This deficit was attributed to the later timing of the Black Friday shopping event and significant shipping disruptions in the Red Sea, which negatively impacted their inventory levels. In the wake of these challenges, H&M's shares saw a decline of more than 5 percent following the announcement. The retailer has been grappling with a tough market landscape, competing against rivals like Inditex, which holds the title of the world's largest fashion retailer, and facing the growing presence of fast-fashion brands such as Shein. The company’s operating profit, nonetheless, showed a positive trend, rising to SwKr4.6 billion for the last quarter, surpassing forecasts of SwKr4.2 billion. H&M's management, led by Chief Executive Daniel Ervér, expressed concerns regarding prevailing macroeconomic conditions and geopolitical factors that could dampen consumer spending in 2025. However, Ervér noted that decreasing inflation and interest rates may offer some reprieve. Furthermore, the company is undergoing efforts to streamline its operations by merging its Monki brand with Weekday, an action that incurred a SwKr200 million hit to its operating profit. Over the past year, H&M has closed 116 stores, reflecting a strategic focus on core business elements to boost profitability. In an attempt to revitalize the H&M brand and attract more customers, the company has increased its marketing efforts substantially. This includes high-profile collaborations, such as enlisting pop star Charli XCX to model their autumn collection and perform at large public events during significant fashion occasions in London and New York. Despite these initiatives, analysts have pointed out that H&M still faces uphill challenges in gaining market share and improving its sales performance in a competitive industry. The stock price has seen a downward trend, declining around 12 percent over the past year, emphasizing the need for the company to act decisively to enhance its market position.