H&M store in London

PARIS — Shares in Hennes & Mauritz AB had fallen by 5.6 percent in late afternoon trading Thursday after the company reported November sales that came in below analysts’ expectations.

In November, the Swedish high-street retailer’s total sales in local currencies, which include value-added tax, were up 9 percent year-on-year, versus analysts’ expectations of 11 percent to 15 percent growth.

The company’s sales had gained 10 percent in October and just 1 percent in a warm September.

Analysts had predicted even higher sales growth for November due to an easy comparative of 4 percent in November 2015, when the terror attacks took place in France and many local shoppers steered clear of high streets and tourists canceled vacations.

On Thursday, H&M, the world’s second-largest retailer by volume, noted its store count came to 4,351 on Nov. 30 versus 3,924 on the same date in 2015. Last month, the company opened 82 stores.

For its financial year ended Nov. 30, the fast-fashion giant posted a 7 percent sales gain in local currencies and including VAT to an estimated 222.82 billion Swedish kronor, or $24.22 billion at average exchange. Converted into Swedish kronor, sales including VAT rose 6 percent.

H&M added 427 new locations in its most recent fiscal year, while pushing to update and expand its e-commerce offer.

Company sales in the fourth quarter ended Nov. 30 advanced 7 percent.

Ratings for H&M stock were mixed following Thursday’s financial announcement. RBC Capital Markets maintained its buy rating, while Barclays Equity Research and Liberum advised investors to hold.

With like-for-like sales flat or slightly down over the course of 2016, H&M’s growth has depended on investing in new stores and its e-commerce infrastructure. The strategy has meant that the group’s capital expenditure requirements are much steeper than for competitors like Inditex, which have been able to maintain high levels of growth in same-store sales.

In addition to high levels of investment, currency headwinds from the strong dollar have helped to sour some investor sentiment toward H&M.

A few analysts have taken a more positive view of the group’s outlook.  A November report by RBC Capital Markets heralded “better times ahead,” citing H&M’s positive brand perception in the growing Chinese market and that exchange rates would likely stabilize in 2017.

H&M is scheduled to release its full results for the financial year, including profits, on Jan. 31.

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