Fast Fashion Fading in Europe as H&M, Zara Shine Light on Industry Strains

Fast fashion is getting tougher.
Zara owner Inditex SA said on Wednesday that profitability shrank to an eight-year low. Main rival Hennes & Mauritz AB reported the first monthly sales drop in almost four years. Shares of both retailers sank.
The reports illustrate the difficulties facing the fashion industry as consumers divert spending to leisure activities and buy more of their apparel from a rising number of online suppliers. The increased competition is putting pressure on prices, while higher production costs are also squeezing profitability.
‘In February, industry data was very challenging,’ Richard Chamberlain, an analyst at RBC Capital, said in a note. Sales declines of 9 percent in Germany and 6 percent in Sweden reflect ‘some spend rotation into other consumer categories.’
H&M shares fell as much as 5.1 percent in Stockholm, the most in three months. A 1 percent drop in February sales was caused by the month having one day fewer than in the leap year of 2016. Adjusting for that, revenue rose 3 percent in local currencies, missing estimates.

This post was published at bloomberg