H&M warns of challenges ahead as late heatwave has it sweating

H&M has laid bare the challenges facing fashion retailers, predicting sales growth of just 1% in September and warning of further discounting.

The fast-fashion giant blamed this month’s “exceptionally warm weather” for keeping shoppers away and said leftover stock raised the risk of more markdowns.

The heatwave followed a tricky third quarter in which profits were dented by the strengthening dollar, the currency used to buy products, and discounts on unsold spring ranges.

Pre-tax profits in the three months to August 31 fell a worse-than-expected 10% to 6.3 billion kronor (£565 million). The dollar effect “is expected to become somewhat negative” in the fourth quarter but boss Karl-Johan Persson remained positive about prospects for the group, which also owns the Cos and & Other Stories chains.

He outlined plans to launch one or two new brands next year and said the pace of long-term investment in IT and technology will slow. “All this gives us a positive view of our opportunities for 2017 and going forward, both in terms of sales and profitability,” he said.