H&M shares drop 13% after CEO casts doubt on June sales, margin target

Published

5 months ago

June 28, 2024

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H&M shares tumbled 13% Thursday after the CEO cast doubt on the retailer’s ability to reach its full-year margin target and predicted lackluster June sales.

Sales this month are likely to fall 6% in local currencies versus a year earlier, partly due to poor weather in many markets, the Swedish company said.

CEO Daniel Erver said H&M still stood by its 10% operating margin goal for 2024, but that it had got harder to reach.

“External factors that influence our purchasing costs and sales revenues, including materials and foreign currency, will have a more negative impact than we expected in the second half,” he told Reuters.

The group said it would need stronger sales growth in the two remaining quarters to hit the margin target, which it aims to achieve by offering more discounts.

H&M offered fewer discounts in June, which was a positive sign for the long run but had a negative impact for the month, Erver told analysts and reporters.

The stock fell 13% to $3.16. it was H&M’s largest single-day drop since the early 2000s.

H&M’s net sales in March-May, the second quarter of its fiscal year, rose 3% in local currencies versus a year earlier.

Operating profit was 7.1 billion Swedish crowns ($672.5 million), up from 4.74 billion a year earlier but below a mean forecast of 7.37 billion in an LSEGpollof analysts.

The worse-than-expected earnings come at a time when many consumers are facing high costs-of-living due to inflation and retailers are seeing a drop in post-pandemic spending.

The Swedish group also has been squeezed between the rock-bottom prices ofSheinand Zara parant Inditex’s higher-end fashions aimed at moreupmarket customers.

Yet Erver is optimistic about H&Ms third quarter.

He said he expects profits to pick up as the weather improves and consumers gravitate toward a new, well-received spring and summer clothing collection.

We are more confident about the rest of the quarter than what we have seen in the first month,” he said.

The CEO also said the company has been expanding its online and in-store presence, with an updated online store that will be introduced in the fall and upgraded stores in New York, London, Seoul and Tokyo.

With Post wires

World

At least 10 dead after fire rips through retirement home in Spain

Published

3 hours ago

November 15, 2024

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At least 10 dead after fire rips through retirement home in Spain

At least 10 people have been killed after a fire broke out at a retirement home in northern Spain in the early hours of this morning, officials have said.

A further two people were seriously injured in the blaze at the residence in the town of Villafranca de Ebro in Zaragoza, according to the Spanish news website Diario Sur.

They remain in a critical condition, while several others received treatment for smoke inhalation.

Firefighters were alerted to the blaze at the residence – the Jardines de Villafranca – at 5am (4am UK time) on Friday.

Those who were killed in the fire died from smoke inhalation, Spanish newspaper Heraldo reported.

The residence is home to 82 elderly residents.

The blaze started in one of the rooms, Fernando Beltran, the national government’s top official in the region, told reporters.

All of the victims were elderly residents, he added.

Fire crews, paramedics and police officers remain on site, said a spokesperson for the regional government of Aragon who confirmed the fatalities.

It took firefighters several hours to extinguish the blaze, they said.

The cause of the fire is unknown and is being investigated.

UK

UK economy grows by 0.1% between July and September – slower than expected

Published

3 hours ago

November 15, 2024

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UK economy grows by 0.1% between July and September - slower than expected

The UK economy grew by 0.1% between July and September, according to the Office for National Statistics (ONS).

However, despite the small positive GDP growth recorded in the third quarter, the economy shrank by 0.1% in September, dragging down overall growth for the quarter.

The growth was also slower than what had been expected by experts and a drop from the 0.5% growth between April and June, the ONS said.

Economists polled by Reuters and the Bank of England had forecast an expansion of 0.2%, slowing from the rapid growth seen over the first half of 2024 when the economy was rebounding from last year’s shallow recession.

And the metric that Labour has said it is most focused on – the GDP per capita, or the economic output divided by the number of people in the country – also fell by 0.1%.

Reacting to the figures, Chancellor of the Exchequer Rachel Reeves said: “Improving economic growth is at the heart of everything I am seeking to achieve, which is why I am not satisfied with these numbers.

“At my budget, I took the difficult choices to fix the foundations and stabilise our public finances.

“Now we are going to deliver growth through investment and reform to create more jobs and more money in people’s pockets, get the NHS back on its feet, rebuild Britain and secure our borders in a decade of national renewal,” Ms Reeves added.

The sluggish services sector – which makes up the bulk of the British economy – was a particular drag on growth over the past three months. It expanded by 0.1%, cancelling out the 0.8% growth in the construction sector.

The UK’s GDP for the most recent quarter is lower than the 0.7% growth in the US and 0.4% in the Eurozone.

The figures have pushed the UK towards the bottom of the G7 growth table for the third quarter of the year.

It was expected to meet the same 0.2% growth figures reported in Germany and Japan – but fell below that after a slow September.

The pound remained stable following the news, hovering around $1.267. The FTSE 100, meanwhile, opened the day down by 0.4%.

The Bank of England last week predicted that Ms Reeves’s first budget as chancellor will increase inflation by up to half a percentage point over the next two years, contributing to a slower decline in interest rates than previously thought.

Announcing a widely anticipated 0.25 percentage point cut in the base rate to 4.75%, the Bank’s Monetary Policy Committee (MPC) forecast that inflation will return “sustainably” to its target of 2% in the first half of 2027, a year later than at its last meeting.

The Bank’s quarterly report found Ms Reeves’s £70bn package of tax and borrowing measures will place upward pressure on prices, as well as delivering a three-quarter point increase to GDP next year.

UK

Meeting the deeply radical anti-tax group that is ‘growing in popularity’

Published

3 hours ago

November 15, 2024

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Meeting the deeply radical anti-tax group that is 'growing in popularity'

“If you are a member of something, it means you’ve accepted membership. Anything with ‘ship’ on the end, it’s giving you a clue: it’s telling you that’s maritime law. That means you’ve entered into a contract.”

This isn’t your standard legal argument and it is becoming clear that I am dealing with an unusual way of looking at the world.

I’m in the library of a hotel in Leicestershire, a wood-panelled room with warm lighting, and Pete Stone, better known as Sovereign Pete, is explaining how “the system” works. Mr Stone is in his mid-50, bald with a goatee beard and wearing, as he always does for public appearances, a black T-shirt and black jeans.

With us are six other people, mainly dressed in neat jumpers. They’re members of the Sovereign Project (SP), an organisation Mr Stone founded in 2020, which, he says, now has more than 20,000 paying members.

As arcane as this may sound, it represents a worldview that is becoming more influential – and causing problems for authorities. Loosely, they’re defined as “sovereign citizens” or “freemen on the land”.

Their fundamental point is that nobody is required to obey laws they have not specifically consented to – especially when it comes to tax. They have hundreds of thousands of followers in the UK across platforms including YouTube, Facebook and Telegram.

Increasingly, they are coming into conflict with governments and the law. Sovereign citizens have ended up in the High Court in recent months, challenging the legalities of tax bills and losing on both occasions.

In October, four people were sentenced to prison for the attempted kidnapping of an Essex coroner, who they saw as acting unlawfully. The self-appointed “sheriffs” attempted to force entry to the court, one of them demanding: “You guys have been practising fraud!”

The Sovereign Project is not connected to any of those cases, nor does it promote any sort of political action, let alone violence.

Instead, they are focused on issues like questioning the obligation to pay taxes, as Mr Stone explains, referencing the feudal system that operated in the Middle Ages.

“Do you know about the feudal system when people were slaves and were forced to pay tax?” he asks.

“Now, unless the feudal system still operates today, and we still have serfs and slaves, then the only way that you can pay taxes is to have a contract, you have to agree to it and consent to it.”

Another member, Karl Deans, a 43-year-old property developer who runs the SP’s social media, says: “We’re not here to dodge tax.”

Local government tends to be a target beyond just demands for tax. Mr Stone speaks of “council employee crimes”.

I ask whether, considering the attempted kidnapping in Essex, there is a danger that people will listen to these accusations of crimes by councils and act on them.

“Well that’s proved,” Mr Stone says. “We only deal with facts.”

Evidence suggests this approach is becoming an issue for councils across the UK, as people search online for ways to avoid paying tax.

Sky News analysis shows that out of 374 council websites covering Great Britain, at least 172 (46%) have pages responding to sovereign citizen arguments around avoiding paying council tax. They point out that liability for council tax is not dependent on consent, or a contract, and instead relies on the Local Government Finance Act 1992, voted on by Parliament.

But the Sovereign Project’s worldview extends beyond council tax. It is deeply anti-establishment, at times conspiratorial. Stone suggests the summer riots may have been organised by the government.

“The sovereign fraternity operates above all of this,” he says. “We look down at the world like a chessboard. We see what’s going on.”

He explains that, really, the UK government isn’t actually in control: there is a shadow government above them.

“These are the people who control government,” he explains.

“A lot of people say this could be the crown council of 13, this could be a series of Italian families.”

Professor Christine Sarteschi, an expert in sovereign citizens at Chatham University, Pittsburgh, says she’s worried about the threat sovereign citizens may pose to the rule of law, especially in the US where guns are readily available.

“The movement is growing and that’s evidenced by seeing it in different countries and hearing about different cases. The concern is that they will become emboldened and commit acts of violence,” she says.

“Because sovereigns truly believe in their ideas and if they feel very aggrieved by, you know, the government or whomever they think is oppressing them or controlling them… they can become emotionally involved.

“That emotional involvement sometimes leads to violence in some cases, or the belief that they have the power to attempt to overthrow a government in some capacity.”

Much of this seems to be based on an underlying and familiar frustration at the state of this country and of the world.

Mr Stone echoes some of the characteristic arguments also made by the right, that there is “two-tier policing”, that refugees arriving in the UK are “young men of fighting age”, that the government is using “forced immigration to destroy the country”.

Another SP member, retired investment banker David Hopgood, 61, says: “I firmly believe it is the true Englishman – and woman – of this country – that has the power to unlock this madness that’s happening in the West.

“We’ve got the Magna Carta – all these checks and balances. We just need to pack up, go down to Parliament and say: It’s time to dismiss you. You’re not fit for purpose.”

The members of the Sovereign Project are unfailingly patient and polite in explaining their understanding of the world.

But there is no doubt they hold a deeply radical view, one that is apparently growing in popularity.