Hennes & Mauritz, AB reported dismal sales in August, due mostly to depleted inventory.
Revenue at stores open at least a year fell 11 percent last month, the fourth consecutive drop and worse than July's 3 percent decrease, Stockholm-based H&M said today. The retailer also reported a 4 percent gain in third-quarter net income to 3.46 billion kronor ($504 million), below the 3.5 billion kronor average estimate of 11 analysts compiled by Bloomberg.
H&M said sales in Spain, the U.S. and France were "weak" in the third quarter because it had too little inventory to keep pace with discounting by competitors. Same-store sales declined 6 percent, though gross margins widened by 0.8 percentage points, led by internal currency hedging policies.
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H&M said it plans to increase store numbers by 240 this year, raising the target from 225. Planned openings include 18 Monki and Weekday stores and nine higher-priced COS outlets. The retailer will start selling fashions online in the U.K. from fall of 2010, it also said today.
August is back to school; not having enough inventory to sell to bargain-hunting customers is a major miscalculation by Europe's second biggest retailer.
