Hennes & Mauritz (H&M) on Wednesday reported a stronger-than-expected rise in gross margin for the first quarter of its fiscal year, as the Swedish group benefited from supply chain improvements and tight cost control.

For the three months to February 29, operating profit climbed to SEK 2.1 billion, compared with SEK 725 million a year earlier, well above the SEK 1.3 billion expected by RBC analysts.

Profit after tax amounted to SEK 1.2 billion, compared with SEK 540 million a year earlier.

H&M posted net sales of SEK 53.7 billion for the quarter, down from SEK 54.9 billion for the same period last year.

But its gross margin rose by 4.3 percentage points, to 51.5% from 47.2% a year ago, whereas consensus was expecting only a 2.8-point improvement.

Analysts at RBC believe that consensus earnings per share (EPS) for fiscal 2024/2025 should be revised upwards by 5% to 10% following the release of these figures.

We believe that H&M has taken a number of steps to improve its multi-channel offering for consumers, which should enable it to defend its positions in its main markets", says the Canadian broker.

Following the announcement of these results, the share price of the world's number two ready-to-wear company jumped by over 13% on the Stockholm Stock Exchange, and was the biggest riser on the pan-European STOXX Europe 600 index.

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