By Scott Kanowsky
Investing.com -- H&M Hennes & Mauritz AB (ST:HMb) has reported a surprise first-quarter income, as the fast fashion retailer was boosted by the consolidation of second-hand platform Sellpy into its operations.
Operating profit for the three months ended on February 28 came in at SEK725 million (SEK1 = $0.0959), up by over 58% from SEK458M in the corresponding period last year. Bloomberg consensus estimates had seen the figure slumping to a loss of SEK1.03 billion.
Operating margin, which H&M hopes to increase to 10% by next year, was 1.3% during the quarter.
Analysts also pointed to H&M's quarterly gross margin of 47.2%. Although the number dipped versus the first quarter of 2022 due to elevated purchasing costs and a strong U.S. dollar, it was still above projections of 45.8%.
Aiding the bottom-line result was a positive effect of SEK999M that stemmed primarily from an accounting gain linked to the decision to fold in Sellpy, an online portal where customers can shop for and sell used items.
Shares in H&M soared by more than 9% in early European trading on Thursday.
The announcement comes after H&M unveiled quarterly sales growth earlier this month that missed expectations. Sales moved up by 3% year-on-year on a local currency basis to SEK54.87B, but the uptick was below Bloomberg forecasts of 4.21%.
In a statement, chief executive officer Helena Helmersson noted that the trading environment remains "challenging." However, she said input cost pressures, which analysts have flagged as a key source of strain for the company, have improved, while plans to reduce expenses are "proceeding at full speed."