H&M results: here’s what the analysts think

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H&M results: H&M Group’s latest financial results were met with mixed reactions from analysts. Some saw opportunities for growth, while others were more cautious. Investors were confident in the company despite the mixed reviews, sending the share price soaring by more than 15% on Thursday. The price continued to surge on Friday at stock market opening before slightly falling.

The market valuation of the company has increased by about 25% in the past month, which indicates that investors are becoming more optimistic. While not pessimistic, analysts were nonetheless cautious. For example, showing a balanced perspective on the stock’s performance, Jefferies maintained a recommendation to hold existing shares rather than purchase more.

Although they warned of the dangers, analysts at Jefferies agreed that the firm was concentrating on improving fashion content to increase asset productivity. Q1 sales were down 2% (mostly due to a leap year), but they saw an uptick in the last days of the quarter and early March, so things looked up for Q2.

In a more gloomy tone, Alice Price of GlobalData said that FY2023/4 got off to a rough start, especially for H&M when contrasted with its portfolio brands. She stressed the significance of H&M’s approach to respond quickly to trends but cautioned that if not implemented properly, it may lead to confusion.

On the other hand, Price did note some good things that had happened, such a rise in operational profit and robust revenue growth in Eastern Europe, especially in Ukraine after stores reopened.

But Robyn Duffy of RSM UK was more pessimistic, drawing attention to H&M’s slowness in the fast-fashion race and the difficulties the company encounters in the current market. After pointing up H&M’s problems in logistics and shop rationalisation, Duffy stressed the significance of strategic agility and prompt investments in these areas.

Still, Duffy saw CEO Daniel Ervér’s efforts to boost profits and margins as a positive development. With Ervér’s goal of a 10% operating margin by year-end, H&M may become more competitive and appealing to investors, which could lead to better times ahead.

While opinions on H&M’s success among analysts may differ, the next few months will be dominated by scrutiny of the company’s strategy and its capacity to respond to changes in the market.

Ethan Sullivan

Ethan's penchant for the pulse of the fashion world extends to covering lifestyle topics, offering readers a seamless blend of the latest style updates and lifestyle trends.

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