H&M sales rise in SA bad

3 Apr 2017

Swedish retailer H&M has continued on its winning streak in SA, dodging the malaise to which domestic retail players have succumbed.

©Tea via 123RF

In the first quarter of its 2017 financial year, H&M's sales increased 39% in rand terms to about R356m from the nine stores it has in operation.

H&M SA opened its 10th store in Nelspruit last week. Its 11th store will be opened in Polokwane at the Mall of the North on 8 April. Europe's second-largest retailer is one of many global players who have moved to SA in a bid to increase market share and search for untapped markets in the hopes of bolstering performance.

Mergence equity analyst Peter Takaendesa said H&M was growing faster than bigger local retailers due to a combination of strong investment into new stores, effective marketing and "possibly better positioned product offering". H&M's results have come at the expense of Woolworths, Truworths and Mr Price who released less than stellar trading updates and results earlier in 2017.

"We estimate that their [H&M] revenue market share in the South African market is only about 1% now and believe they will continue to gain market share off this low base," said Takaendesa.

The analyst said the accelerated levels of new store roll-outs were not only taking place in SA, but also across some of their operating countries, so "this is a deliberate strategy driven at the group level".

The first quarter group report showed that established-market sales were under pressure.

Source: Business Day

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