H&M expects 2018 to be a challenging year. Same-store sales are expected to see growth only in 2019. H&M continues to battle through high levels of inventory and sub-par styles on sales floors around the world, which will weigh on profits this year. The fast fashion retailer has over 4,000 stores globally and expects online sales to grow 25 per cent in 2018.
Ultimately, investors will continue to heavily discount a more bullish longer term outlook until supportive trading evidence starts emerging. Competition is getting fierce. Primark, which is known for its ultra cheap clothing, has been attracting more cost-conscious customers from H&M and could become a bigger threat as it expands more into the US. Zara has seen double-digit sales growth. It has an advantage in following the whims of fashion as it’s able to move the latest designs to the rack within two weeks. It has also highly integrated its online and physical stores, this year debuting a popup store in London designed primarily for ordering and collecting of online orders.
Even Gap has seen its shares increase more than 40 per cent over the past year. Sales for the iconic American brand have stabilized with a push towards trendier basics and various online initiatives.