Fashion chain H&M has reported a much smaller than expected fall in quarterly profit after it managed to sell more products at full price.
The group’s margins held up, in a first sign that its turnaround strategy is producing results.
Shares in H&M, the world’s biggest clothing retailer after Zara-owner Inditex, surged as much as 16 per cent as the group said it expected sales at discounted prices to continue to fall in the current quarter.
H&M has trailed Inditex in performance and has seen its profits shrink and stocks pile up in recent years as it failed to react quickly enough to demand swings and a boom in e-commerce.
The profit and margin improvement indicated that H&M’s plan to revive profit growth, which has involved heavy investment in logistics, integration of stores and online business and an in-depth review of its stores and brands, is working.
Kate Ormrod, lead retail analyst at GlobalData, said: “The value retailer’s optimism about the future is justified, with net sales in local currencies rising 7 per cent in March. However, it will come up against tougher comparatives in the second half.”