H&M has reported lower-than-expected quarterly sales as shoppers tighten their belts with energy and food bills soaring and the world's second-biggest fashion retailer struggles to compete with rival Zara.
Third-quarter net sales at the Swedish group were up 3.0 per cent from a year earlier at 57.5 billion crowns ($5.4 billion), short of the 5.0 per cent which analysts polled by Refinitiv had forecast for the June-August quarter.
"The third quarter got off to a weak start, in common with the industry in many of the group's major markets," H&M, which does the bulk of its business in Europe, said in a statement on Thursday.
"Sales improved sequentially during the quarter, with a better start for the autumn collections than last year."
Measured in local currencies, sales were down 4.0 per cent, reports Reuters.
Shares in H&M, which have lost more than two-thirds of their value this year, were down 1.9 per cent in early afternoon trade.
"As we saw from Primark last week, we think the more value conscious end of the sector is proving very challenging in Europe ex-UK, reflecting where pressures on household cashflow are most acute," RBC analysts said, noting German industry data showing falling store sales in the period.
They said in a note H&M's smaller chains like COS and Arket have been more resilient lately than the H&M brand.
The Swedish retailer has substantially underperformed market leader Inditex ITX.MC, the owner of Zara, which this week posted sales growth in constant currency terms of 16% for its May-July quarter. The Spanish group's growth pace however slowed to 11 per cent in the Aug.1-Sept. 11 period.
Inditex on Wednesday flagged further price hikes this autumn to offset soaring costs, despite worries demand would wane due to the cost of living crisis.
H&M is due to publish its full third-quarter earnings report on Sept. 29.