H&M is hiring more security as shoplifting increases

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H&M's chief financial officer said on Wednesday shopfliting has been rising in recent months, and that the fast-fashion retailer was looking at solutions to the problem.

He was the latest executive at a major retailer to warn about the growing problem.

"It is an increasing problem in many markets," CFO Adam Karlsson said on a call with media after the company released quarterly results.

H&M's CEO Helena Helmersson said on Wednesday shoplifting has been a particular problem in the US, and the world's No. 2 fashion retailer is looking at taking steps such as increasing security in its stores.

"What is standing out is... the US," she told Reuters in an interview, adding that retail theft is an industry-wide issue.

H&M could start cutting its prices as inflationary pressures ease, Karlsson added as the world's second-biggest fashion retailer reported a dip in sales for September.

"We see that the sourcing cost level is developing in the right direction. This gives us room to manoeuvre on price and really secure the best offer," Karlsson told analysts and reporters on a call.

"With the improved sourcing situation and cost levels we also see a possibility for price decreases going forward."

H&M reported a pickup in quarterly profit margins on Wednesday, boosting optimism about its turnaround efforts even as the fashion retailer blamed unusually hot weather in many of its European markets for delaying the autumn shopping season.

H&M, whose biggest rival is Zara owner Inditex, said September sales would fall by 10% year-on-year measured in local currencies.

"It's clear that more heavy autumn product types are the ones where we see a delay in selling," H&M CEO Helena Helmersson said in an interview, adding: "We know that we can't draw big conclusions after one month."

Tailored suits, denim, fine knits and blouses are among the most popular styles so far this season, she added.

The predicted sales drop compares with Inditex reporting a 14% increase in sales between Aug. 1 and Sept. 11.

"If the sales at your competitor basically go up by 14% with the same weather, that tells you something, to my mind," said Vera Diehl, portfolio manager at Union Investment, which holds shares in H&M and Inditex.

Still, H&M's shares jumped by more than 5% in early trade as profits in the June-August quarter rose and the company stuck to a goal of lifting its operating margin to 10% next year, saying its cost-cutting programme was continuing "at full speed".

H&M's margin reached 8% in the third quarter, from 2% a year earlier, as the retailer said it had prioritised profitability and inventory rather than sales. The 10% target is "challenging but achievable," Barclays analyst Nicolas Champ said.

Operating profit in the Swedish group's third quarter jumped to 4.74 billion crowns (R8.3 billion) from 902 million a year earlier. Analysts polled by LSEG had on average forecast a 4.72 billion crown profit.

Last year's figure included a one off-cost of 2.1 billion crowns for the group's exit from Russia, which also accounted for four percentage points of the 10% September sales decline.

As cost pressures ease, H&M's Chief Financial Officer Adam Karlsson said he saw the potential for price cuts, without giving a timeframe.

Shoplifting has increased over the past two quarters, Karlsson said, adding to a string of retailers flagging worsening crime, especially in Britain and the United States.

In China, H&M this month returned to JD.com, one of the country's biggest e-commerce marketplaces, in a sign the brand is recovering after a prolonged absence after criticism over its stance on alleged human rights abuses in the Xinjiang region.

It returned to Alibaba's Tmall e-commerce platform last year, but has not been available on JD.com since 2021.

Helmersson said the return to JD.com was a milestone, but H&M was still "not where it wants to be" in China.

The company said it would start a share buyback programme on Wednesday, planning to buy back up to 3 billion crowns of stock by March 31 next year.