PARIS — Sweden’s Hennes & Mauritz blamed an unusually hot European summer for weaker than expected third-quarter sales and earnings, as it reported profit after financial items up 9.1 percent for the three-month period.
The fast-fashion giant said profit in the third quarter ended Aug. 31 totaled $268.5 million, up from $246.6 million in the year-earlier period. The market had expected profits of $277.6 million. Gross margin for the quarter stood at 55.6 percent, up from 54 percent last year.
Sales in the quarter grew 4.3 percent to $1.71 billion from $1.63 billion last year. At comparable currency exchange rates, sales increased 7 percent. Analysts had hoped for growth of about 8 percent.
Dollar figures have been converted from the Swedish krona at current exchange. H&M reported profits of 2.08 billion kronor on sales of 13.21 billion kronor in the quarter. Analysts had expected profits of 2.15 billion kronor.
Through the first nine months of the year, profits rose 21.2 percent to $817.2 million, or 6.33 billion kronor, as sales grew 7.7 percent to $5.19 billion, or 40.23 billion kronor.
“Sales in August were down significantly in the first two weeks due to the weather,” said Carl-Henric Enhorning, head of investor relations, on a Thursday conference call. “They picked up somewhat in the last two months.”
Enhorning declined to give any indications of September sales performance.
H&M’s stock closed up 1.7 percent to $22.76 in trading on the Stockholm stock exchange.
Analysts said they found good news in a report that losses narrowed in the U.S., where H&M operates 59 stores.
“Sales in the U.S. were better than expected,” said Enhorning. “Costs are going down.”
Enhorning said H&M had cut its losses in the U.S. by about half through the first nine months. “We are on track in the U.S.,” he said. “We didn’t break even in the quarter, but maybe in the fourth quarter.”
In the quarter, U.S. sales rose 19.7 percent to $87 million and were up 38 percent in dollars. The year-to-date tally was $245.4 million, a 14.5 percent increase that also came to 38 percent when measured in dollars.
Enhorning said sales were disappointing in Germany, Austria and Switzerland, which together represent about 40 percent of H&M’s sales.
Meanwhile, business in France and Spain was strong. Sales in Poland, the Czech Republic and Portugal, three markets in which H&M recently opened, exceeded expectations, said Enhorning.
H&M opened 63 new stores through the end of the third quarter, including 12 in the U.S., 11 in Germany, and nine in France, bringing its total to 901 across Europe and the United States.
The firm expects to open another 51 stores in the fourth quarter, including nine in the U.S.
Enhorning said a new tailored men’s line would be rolled out to some 80 stores during the next few months.