Luxury & Fashion: Sales growth or margin protection? H&M seems to have chosen the former
Luxury & FashionSales growth or margin protection? H&M seems to have chosen the former
Resolving the margin conundrum even more challenging. Fashion groups are currently facing a very difficult dilemma between prioritizing sales growth and margin improvement, in a context of consumer squeeze and inflation. H&M has made the deliberate choice to invest in its value-for-money positioning through very targeted price hikes, which was materialized by a steep decline in profitability in Q3. This downward trend will continue over the past quarter and will clearly not be stopped by the modest cost program announced yesterday. After having cut our FY22-24 estimates by 9% on average, our TP is lowered to SEK150 and our Neutral recommendation is reiterated as we have a clear preference for Inditex.
H & M Hennes & Mauritz is engaged in the sale of clothing and cosmetics in Sweden and internationally. Co.'s stores offer basics, tailored classics, sportswear, and maternity clothes for women; basics, leisurewear, and seasonal fashions for men; denim and street fashions; and fashion wear for children and teenagers, as well as accessories, underwear, and shoes. Co. also provides makeup and body care products; and home fashion products, which include interior textiles for the bedroom, bathroom, living room, and kitchen. Co. has approximately 3,132 stores, including 110 franchise stores, 85 COS stores, 79 Monki stores, 21 Weekday stores, 8 & Other Stories stores and 3 Cheap Monday stores.
Since 1996, Bryan, Garnier & Co has been growing with an absolute conviction that the investment banking landscape would experience a major revolution: most of the large local generalist banking groups will disappear to the benefit of a handful of global powerhouses, and an emerging group of independent, highly specialised boutique investment banks.
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