H&M (ST:HMb) (HNNMY) saw its shares rise more than 13% in Stockholm after the world’s largest fashion retailer posted a notably higher-than-expected operating profit for the fiscal first quarter.
The company reported an operating profit of €2 billion, a significant rise from €725 million, and exceeding the consensus estimates of €1.4 billion.
On a per share basis, earnings stood at 0.75 krona, above the consensus projection of 0.51 krona, and up from 0.33 krona a year ago.
Meanwhile, the retailer’s net sales fell to 53.70 billion krona from prior year's 54.87 billion krona, though still above the 53.24 billion krona anticipated by analysts.
Moreover, H&M saw a 2% increase in sales at the beginning of its second quarter, indicating a rebound in consumer interest in its clothing and accessories.
“The quarter’s sales gradually improved during February with well-received spring collections, which is a positive sign that we are on the right track,” said CEO Daniel Erver, who took on the top role just two months ago.
“Our top priority is to strengthen sales,” he added.
H&M said it aims to achieve a 10% operating profit margin throughout the current year.
Commenting on what they see as "impressive Q1" print, Morgan Stanley analysts raised their target price for the H&M stock from 150 to 170 krona.
"HMB's first update from new CEO Daniel Erver revealed a strong gm beat, allowing the group to leverage -ve organic sales," analysts said.
"Momentum in the early stages of S/S 2024 turned firmly positive. And a clearer focus on hiking fashion content to lift asset productivity has been confirmed as the key focus," they added.