H&M ends monthly sales reports on a high note
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H&M ends monthly sales reports on a high note

Swedish fashion giant Hennes & Mauritz AB (H&M) reported that June’s sales were up 7% from the same month a year ago. That’s in local currencies – converted back into Swedish Kronor, the month’s sales rose by 10%. In June 2016, they increased by 8%. The company also announced that this good news story would mark the end of its monthly reporting: going forward, H&M will adopt the quarterly reporting format that is common amongst other fashion retailers.

Over the last 30 days, H&M’s share price has gone up by 14%

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SOURCE: Yahoo Finance

The company released a statement detailing the reasons behind its move to quarterly figures over monthly ones. It said:

"The reasoning is that a month is far too short a period over which to assess how sales are developing; in fact, a single month's sales can actually be misleading, since calendar and weather effects--among other things--may significantly affect the outcome.”

"Instead sales development should be viewed over a longer period of time, such as over a season or a quarter. This is also the reason why the majority of companies in fashion retail currently report their sales quarterly rather than monthly."

Investors should be heartened by H&M’s positive June, but they should also be thankful that the company is changing its reporting structure. While quarterly reports over monthly ones will see a reduction in the total number of reports investors get, they will likely be more valuable. This, in part, is because the company will be adding capital markets days to brief investors, where they will offer more in-depth information about the business.

Disclosure

Dominion holds H&M in its Global Trends Luxury Fund.


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