H&M beats profit expectations after cutting back on discounts

Quarterly profits at H&M comfortably beat expectations, after the Swedish retailer increased margins by selling more of its clothes at full price.

The world’s second-biggest clothing retailer on Wednesday said its second-quarter gross margin rose to 52.2 per cent in the three months to the end of May, up from 50.9 per cent in the same period a year ago.

Net profit for the quarter was SKr3.68bn ($361mn), well ahead of analysts’ forecasts of SKr3bn and up from SKr2.76bn in the same quarter a year ago.

Chief executive Helena Helmersson said that although Covid-19 restrictions had eased around the world, supply chains were still strained and inflation was “substantial”.

She also cautioned that the suspension of activity in Russia, Ukraine and Belarus would account for five percentage points of an expected 6 per cent year-on-year decrease in June sales.

H&M also said it would accelerate its expansion in South America and buy back SKr3bn of its B shares.