Sweden's H&M Group's shares drop after weak third quarter results

Swedish fashion giant H&M Group's shares dropped about 6% in early trading in Stockholm on Thursday, a reaction attributed to the company's third quarter report which highlighted weak profit and sales.

Looking ahead, the company said it projects higher sales in the month of September.

Separately, that company's board of directors has decided to buy back H&M class B shares for 1 billion Swedish kronor ($98.5 million), based on the authorization granted by the annual general meeting.

The share buyback is starting today and continuing until no later than November 26. With the programme, H&M plans to transfer capital to the shareholders and adjust the company's capital structure.

The total number of shares in H&M is 1.61 billion of which 194.4 million are A shares and 1.42 billion are B shares. H&M currently holds none of its own shares.

In the third quarter, H&M's profit attributable to shareholders fell to 2.32 billion kronor from last year's 3.33 billion kronor.

Earnings per share were 1.44 kronor, down from 2.04 kronor a year ago. Operating profit amounted to 3.51 billion kronor, lower than prior year's 4.75 billion kronor.

Operating margin was 5.9%, down from 7.8% a year ago. The H&M group's net sales in the third quarter declined to 59 billion kronor from 60.9 billion kronor last year.

In local currencies, net sales were flat compared with the previous year. Regarding the current quarter, H&M noted that the autumn collection has been very well received and sales in the month of September 2024 are expected to increase by 11% in local currencies from the same period last year.

The cost of markdowns in relation to sales in the fourth quarter is expected to increase somewhat compared with the previous year.

In Stockholm, H&M shares were trading at 169.85 kronor, down 6.34%.