HMRZF - H&M stock surges on surprise profit

2023-03-30 07:51:37 ET

H&M ( OTCPK:HNNMY ) shares surged nearly 20% during the European session on Thursday after posting an operating profit of SEK 725M ($69.8M), bolstered by cost-cutting efforts.

The Swedish retailer reported a 12% increase in net sales for the first quarter to SEK 54.87B ($5.5B). Excluding Russia, Belarus and Ukraine the increase was 16% in SEK and 7% in local currencies.

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

The retailer reported a 47.2% gross margin for the quarter amid inventory management actions. Inventory levels are now more in line with historical norms, according to Helena Helmersson.

“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,” she said. “The H&M group continues to stand strong with a robust financial position, stable cash flow and a well-balanced inventory. Our increased level of investment within all three growth areas makes us well placed for continued sustainable and profitable growth. The start of the year shows that we have taken further steps towards the goal of achieving an operating margin of 10 percent already next year.”

Shares of H&M ( OTCPK:HNNMY ) headed about 17% higher in the European afternoon session.

Read more on Spanish rival Inditex’s recent results .

For further details see: