H&M said unusually hot weather in many of its European markets had delayed the start of the autumn shopping season, which has depressed sales in September. Meanwhile, cost cuts helped the fashion retailer to increase its quarterly profit.

H&M, said September sales (measured in local currencies) would be down 10 per cent year on year. However, the rival Zara owner Inditex reported that its sales between Aug 1 and Sep 11 were up 14 per cent.

The decline deals a blow to hopes that the world’s second-biggest fashion retailer is turning its performance around after lagging behind Inditex, as a cost-of-living crisis curbs shoppers’ spending.

“If the sales at your competitor basically go up by 14 per cent with the same weather, that tells you something, to my mind,” said Vera Diehl, portfolio manager at Union Investment, which holds shares in both H&M and Inditex.

Operating profit in the June-to-August period, the Swedish group’s third quarter, was 4.74 billion crowns (S$587.5 million) against the year-ago figure of 902 million crowns. Analysts polled by LSEG had on average forecast a 4.72-billion-crown profit.

The year-ago figure included a one-off cost of 2.1 billion crowns for the group’s exit from Russia, which also accounted for 4 percentage points of the 10 per cent September sales decline, H&M said.

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The company stuck to its goal of increasing operating margin to 10 per cent by the end of next year, and said its cost-cutting programme was continuing “at full speed”.

The margin target is “challenging but achievable”, Barclays analyst Nicolas Champ said, adding that it would, however, require some acceleration in top-line growth.

H&M also said it had this month returned to JD.com, one of China’s biggest e-commerce marketplaces, after a prolonged absence due to criticism over its stance on alleged human rights abuses in China’s Xinjiang region.

It returned to Alibaba’s Tmall e-commerce platform last year, but had not been available on JD.com since 2021.

H&M announced a share buyback programme starting on Wednesday (Sep 27), planning to buy back up to 3 billion crowns of stock by Mar 31 next year. REUTERS