H&M sees share price soar on back of strong growth
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H&M sees share price soar on back of strong growth

Hennes & Mauritz AB (H&M) saw its share price rise the most in a single day in 17 years this week when it reported a surprise rise in sales. This led to current speculation that the Swedish fashion retailer – which has had its problems recently – may have turned a corner. The company’s share price increased by 18% on Monday, and only dropped back a couple of points in the following days. That means, on Monday, the company’s market cap increased by an incredible $4 billion!

H&M’s share price has appreciated by more than 15% over the last 5 days

graph 1909 hm

SOURCE: Yahoo Finance

H&M said that its revenue for the third quarter exceeded even the highest analyst estimates, as it managed to clear a backlog of apparel that has been hanging over it with deep discounts. A 9% sales rise, year on year, and a weak krona helped to boost results and led to the stocks outperformance at the beginning of the week. Charles Allen, a Bloomberg Intelligence analyst, wrote “H&M seem to have come close to stabilising same-store sales. If they have managed to reduce inventory, weak margins are likely to be forgiven.”

In separate news, the UK’s Mail on Sunday newspaper reports that H&M’s chairman Stefan Persson has held discussions with banks including Goldman Sachs and JPMorgan about a “debt package to take the firm private.” Rumours about a privatisation have abounded since Persson made a number of share purchases over the previous year – however, he has consistently denied that he’s planning a buyout.

Disclosure

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


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