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H&M reports better-than-expected profit, stocks jump


Swedish fashion retailer H&M reported a smaller than expected fall in first-quarter pretax profit on Friday as it sold more products at full price and saw an improvement in margins.

The Swedish clothing retailer reported first-quarter profit that beat expectations, shares rise 16%.

Stocks impacted: Hennes & Mauritz AB (HM-B)

The retailer's pretax profit fell for the seventh straight quarter in December-February, to 1.04 billion Swedish crowns. That was down from 1.26 billion a year ago, but was well ahead of the 708 million forecast by analysts. The gross margin inched up to 50.0 percent, from 49.9 percent a year ago, defying forecasts for a fall to 49.4 percent. Markdowns in relation to sales decreased by around 1.5 percentage points in the first quarter from a year earlier. In recent years, the company has seen profits shrink and stocks pile up due to slowing footfall at its core-brand stores against the backdrop of mounting competition and not reacting fast enough to demand swings. Following a better-than-expected report, the company’s shares jumped 16%, with the rally may have been spurred by short squeezes as many investors have bet against the stock.

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