The summer ended on a high note for Hennes & Mauritz (H&M). The world’s second largest fashion retailer continued its upward sales trend in August reporting a 19 percent spike in year-on-year sales for the month, beating an average forecast by analysts of 12.9% growth. Net sales for H&M from June through August were pegged at $5.4 billion excluding sales tax.
The substantial increase was attributed to online expansion, new retail store design, more product offerings, new brands, and the heating up of a previously tepid U.S. economy. A burst of warm weather in Northern Europe was another factor H&M attributed to the upswing.
In August H&M, which recently ramped up its web retailing operations, went head-to-head against Spain’s Inditex in the latter’s home country with the launch of its first online store there. H&M online presence in Spain is part of the company’s plans to debut online sites in eight to ten additional markets in 2015.
Net profits for Inditex for the first half of 2014, according to analysts, are expected to decline 4.4% from the same period a year ago, attributed in part to negative currency fluctuations.
Despite bullish sales figures in recent months for H&M, analysts suggest that revenues could cool down and margins be squeezed due to increased wages in Asian sourcing countries and rival retailers resuscitating their competitive efforts.