STOCKHOLM (Reuters) - H&M (HMb.ST), the world’s second largest clothing retailer, posted a surprise drop in sales last month, the first such decline in four years sending its shares 4.5 percent lower.
The Swedish budget fashion firm said on Wednesday local-currency sales fell 1 percent year-on-year in February, against a forecast in a Reuters poll of analysts for a 6 percent rise.
That was in stark contrast to bigger rival Inditex (ITX.MC) the owner of Zara, which reported earlier on Wednesday a 13 percent increase in sales from Feb. 1 to March 12.
The total apparel market in H&M’s biggest market Germany shrank 9 percent in February, according to a survey of retailers conducted by Textilwirtschaft and published on March 8.
Spain’s Inditex is less exposed to northern Europe than H&M and has a larger share of sales from brands other than its flagship Zara brand. It also has a larger share of sales in emerging markets.
H&M’s shares were down 4.5 percent at 0925 GMT to leave the stock down 17 percent over the past year.
“I think market conditions are the main driver of the weak February number,” UBS analyst Adam Cochrane said, adding investors also fear H&M is losing market share.
H&M, which saw sales growth slow and profits fall last year, is branching out into more brands to reach more customers and investing to improve its online services in response to tougher competition in its budget segment and from online-only players.
It said a negative calendar effect of 4 percentage points weighed on sales in February, which is the final month of the group’s fiscal first quarter.
Fiscal first-quarter sales were 47.0 billion crowns (4.2 billion pounds), up from a year-ago 43.7 billion but below a 48.1 billion mean forecast in Reuters’ poll of analysts.
H&M, which did not comment further on the sales figures, is due to publish its full fiscal first-quarter report on March 30.
The company in January launched a target for annual local-currency sales growth of 10-15 percent and said it expects to be within that range from this year on.
($1 = 8.9528 Swedish crowns)
Reporting by Anna Ringstrom, additional reporting by Helena Soderpalm; Editing by Keith Weir