Whatâs Going On Here?H&M â the worldâs second-biggest clothing retailer â posted impressive quarterly results on Wednesday. What Does This Mean?H&M said online sales continued to do well last quarter, but it was bricks and mortar stores that came out swinging. Demand was so strong, in fact, that the retailer didnât need to offer so many discounts this time around, which helped its pre-tax profit come in 33% higher than the same time last year. Still, H&M isnât in the clear: the company said its decision to stop selling in Russia â its sixth-biggest market last year â contributed heavily to a 6% dropoff in sales this month compared to June 2021. Chinaâs not helping either, hampering the retailerâs business with lockdowns and a boycott of its products thatâs led to the closure of its flagship store in Shanghai. H&M, then, is accelerating its growth elsewhere to offset these slowdowns, with plans to open 94 new stores this year. Why Should I Care?The bigger picture: A fashionista face-off.
Investors were just relieved to see that higher costs didnât cripple H&Mâs profit â something analysts have been warning about for months. But the company still has some way to go if it wants to beat main rival Inditex, which reported earlier this month that its quarterly profit was 80% higher than the same time last year. H&M has a plan to catch up: itâs aiming to keep its next round of price hikes smaller than those of its competition.
Zooming out: The ECB gets its gladrags on.
Low-cost clothes retailers like H&M and Inditex are made for moments like these, when inflation in Europe is spiraling out of control. Data out on Wednesday showed that Spanish inflation hit an all-time high of 10% this month, while Germanyâs reading only eased thanks to its governmentâs temporary support measures (tweet this). That suggests the ECB will still kick off interest rate hikes next month, with some economists pushing for an even more aggressive move than the planned 0.25%. | 