H&M sees slow start to spring season as cold weather impacts Q1 sales

H&M Group warned that cold weather has delayed demand for spring ranges in many of its markets, but posted an unexpected quarterly profit thanks to a boost from its second-hand platform Sellpy.

The owner of H&M, COS and Monki said sales in local currencies for the three months to 28 February 2023 lifted 3% and are expected to edge up by just 4% in March 2023. Sales across Western Europe, including the UK, grew 9% in the first quarter.

It said: “The start of the spring season has been delayed in many important markets as a result of cold weather. The spring collections have been well received where the weather has warmed up.”

H&M Group posted operating profits of £56.3 million (SEK725 million), up from £35.6 million (SEK458 million) a year earlier and against expectations for a loss.

The company's results were boosted after bringing in its Sellpy earnings, adding around £77.7 million (SEK1 billion) to operating profits. However, this was offset by soaring costs, with it facing higher shipping prices, a hit from closing operations in Russia, and a £16 million (SEK200 million) leap in its energy bills.

H&M Group also revealed that its costs increased by 3% in local currencies over the first quarter. But it insisted its cost-cutting programme was “progressing at full intensity” and is set to deliver savings of around £155.4 million (SEK2 billion), which will “gradually become visible starting in the second half of 2023”.

Helena Helmersson, CEO of H&M Group, said: “Although the world around us remains challenging, we are seeing several areas where developments are going in the right direction.

“The external factors that influence purchasing costs continue to improve, work on the cost and efficiency programme is proceeding at full speed, and many of the changes that we have made in recent years are starting to have an effect. At the same time, the spring collections have been well received in the markets where spring has arrived.”