Swedish clothing giant Hennes & Mauritz (H&M) stoked hopes for a turnaround in 2010 with a sharp rise in December sales as it beat expectations for fourth quarter pretax profit, helped by store expansion.
H&M, which faces stiff competition from rivals such as Gap and Inditex, has weathered the economic downturn better than many rivals, thanks to its geographic spread and low-priced profile.
After undershooting sales forecasts for the last three months of its fiscal year, which runs to the end of November, the company turned a corner in December with a 3 per cent rise in same-store sales, versus a 1.1 per cent fall seen in a Reuters poll.
That was the first positive result for same-store sales since April of 2009, and the strong momentum seemed to carry over to January when total sales increased by 13 per cent compared to the same period last year.
H&M, which recently teamed up with French designer Sonia Rykiel to launch a line of fashionable lingerie, posted fourth-quarter pretax profit of 7.99 billion Swedish crowns ($1.10 billion), beating an expected 6.97 billion crowns in a Reuters poll of 25 analysts.
While annual sales suffered from the gloomy mood among consumers, notably in Europe, the latest monthly figures may show that H&M could be starting to reap the benefits of its vast network of outlets and new investments in Asia.
Retailers are still suffering from weak consumer spending and sales, despite a nascent economic recovery. Retail sales data in Europe showed a larger-than-expected fall in November, though some surveys hint that consumer confidence is improving.
Inditex, Europe's biggest clothing retailer and owner of Zara, beat nine-month net profit forecasts when it reported earnings in December and said sales had picked up heading into the key Christmas period.
Reuters
