On Thursday, the world's second-largest publicly traded fashion retailer H&M cast doubt on its full-year profit margin target after its quarterly earnings missed expectations and it forecasted a decline in June sales.
The Swedish company stated that its sales for the month are expected to drop by 6% compared to the same period last year, partly due to poor weather in many key markets.
CEO Daniel Erver said that although the group still believes in its target of a 10% operating profit margin for 2024, achieving this goal has become more challenging.
He said, "External factors that influence our procurement costs and sales revenue, including materials and foreign exchange, will have a more negative impact in the second half of the year than we had anticipated."
"The most important prerequisite for achieving our target is that sales growth in the second half of the year needs to be further strengthened, surpassing the increase in the second quarter," he added.
H&M often lags behind Inditex, the parent company of Zara, while China's fast-fashion group Shein is also rapidly expanding in Europe and plans to go public in London.
The Swedish company has struggled to win back customers, primarily because its core budget-conscious shoppers are reluctant to spend when inflation erodes purchasing power.
