H&M July sales fall more than forecast

Hennes & Mauritz posted a 6 per cent drop in like-for-like sales in July, lagging expectations, amid weak consumer sentiment in Europe where the Swedish budget-fashion giant sells most of its clothes.

That was the biggest drop since April 2010, when sales in local currencies at established stores were also down 6 percent.

Analysts had expected a 5.1 per cent fall in sales amid weak markets and tough year-ago comparisons, according to a Reuters poll.

The world No 2 clothes retailer after Zara owner Inditex said total July sales, which includes stores opened in the past year, were up 3 per cent in local currencies - the smallest rise since March, missing expectations for a 4.2 per cent increase.

Like-for-like sales at H&M often track developments in its largest market, Germany. Clothing sales there were flat in July, according to industry journal Textilwirtschaft.

Inditex has suffered less than H&M from slack European demand because of a stronger presence in fast-growing emerging markets.

July is the second month of H&M's financial third quarter. Turnover in its second quarter was up 2 per cent year on year.

In June, total sales grew 5 per cent while like-for-like sales fell 4 per cent amid tough year-ago comparisons and major markdowns by competitors.

H&M said it had 2,306 stores at the end of July compared with 2,066 a year earlier. The group has stores in 40 countries and plans for 250 more stores in 2011 from 2010.

H&M does not release absolute monthly sales figures, only the percentage change, and does not comment on the figures.