H&M profit beats forecast, sees ‘good’ start to summer

STOCKHOLM (Reuters) -H&M, the world’s second-biggest fashion retailer, reported stronger than expected March-May profits on Thursday and said third-quarter sales were off to a good start as the company strives to catch up with faster-growing rivals.

Operating profit in the Swedish group’s fiscal second quarter was 4.74 billion Swedish crowns ($438.55 million) down from 4.98 billion a year earlier but ahead of a mean forecast of 4.07 billion in a Refinitiv poll of analysts.

H&M, which has lagged Zara owner Inditex (BME:), has sought to raise its fashion appeal and boost its higher-priced brand Cos, targeting shoppers less vulnerable to a rising cost of living as fast-fashion giant Shein takes market share with cheap clothes.

“The summer collections have been well received and the third quarter has got off to a good start,” Chief Executive Helena Helmersson said in a statement.

“The conditions for increased growth as well as profitability continue to develop in a favourable direction,” she added.

Local-currency sales for June 1-27, the first month of H&M’s third quarter, rose by 10% compared with the corresponding period last year.

($1 = 10.8084 Swedish crowns)