It was another lackluster quarter for H&M

Cheap or chic: that is the root of the question for H&M, as the fast-fashion giant reported a first-quarter operating profit of ~$120 million (SEK 1.2 billion), well below the 1.9 billion kronor analysts had expected.

Part of the problem for H&M is that it has a growing pile on unsold clothing. The amount of stock-in-trade on its balance sheet rose 9% year on year, while sales only grew 3%, which is why the company has been slapping more of its red discount stickers on products in its stores and online.

The retailer has a history of struggling to maintain a tight inventory, especially after the pandemic, and has seen shares swing on its progress of clearing the stockpile. This time around, H&M’s new CEO, Daniel Ervér, expects that only “towards the end of the year we see that we will be in a better inventory situation than we were a year ago,” per an interview with Bloomberg.

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