H&M’s poor consolation to drained marketsThursday, 30 September 2010
The FashionUnited Top 100 Index managed to recover from
previous days drops, reaching the 1.188.88 heights on Wednesday. As markets were anticipating since a week ago, H&M’s 3rd quarter results were big news for the international quoted apparel industry.
As it was revealed yesterday’s morning, Europe’s second-largest clothing retailer, fell the most in almost two years in Stockholm trading after third-quarter profitability missed analysts’ estimates, reported Bloomberg. By the end of this period, the Swedish company’s shares dropped on Wednesday as much as 7.5 percent, the steepest intraday decline since Dec. 5, 2008. A 23% increase in third-quarter profit was below estimates as the gross margin narrowed. H&M said it increased investment in improving the “customer offering,” without being more specific. Within the FashionUnited Top 100 Index, H&M closed yesterday 1.5 points up from its last trading.
These corporate news did not offer much support to European investors, with Swedish fashion retailer warning that its store openings for the rest of the year would be slowed by delayed construction projects.
The European Stock Exchange Markets appeared exhausted by the constant signs of changes. Stocks slipped in muted trading Wednesday as protests in Europe against austerity measures renewed worries about the region's finances and helped keep buyers at bay. Once again, the markets moved into negative territory, while the concerns about the debt crisis are still present. Ted Baker dropped 3.65 points and IC Companys lost 1 point, while H&M, Inditex, the French PPR, Marks & Spencer (+ 2.1 points) and Puma AG (+1.55 points) became the only European apparel companies to overcome the tumbles provoked by the strikes happened in Spain, Belgium and Ireland.
The social unrest has raised concerns that countries like Spain, whose debt some say could be downgraded again soon, will not be able to implement the policies required to heal their bloated public finances. However, Inditex, one of the largest Spanish companies and leading international high street apparel brand, was alien to these struggles, scratching 0.19 points at the closure of the session. owev
Crossing The Pond, U.S. stocks edged lower in early trading on Wednesday as massive protests in Europe added to the fears about the continent's financial system. Demonstrations continued in Brussels, Spain and Ireland as labor unions protested the austerity measures which they claimed to be unfair for average workers. The protests triggered market concerns about the ability of European countries to cut debts. European stocks markets fell across the board, sending pressures to the Wall Street.
In the meantime, China currency legislation being considered by Congress has divided textile makers and apparel importers over its ability to create jobs and economic growth.
The bill, which was being voted on yesterday (29th September) by the House of Representatives, would give US companies the ability to defend themselves against Chinese currency manipulation by placing countervailing duties equal to the Chinese manipulation on imports of certain goods from China.
Finally, in Asia markets closed higher as investors focused on the likelihood that the Fed would help the U.S. economy. House of Pearls increased by 4.61% in India, whereas its compatriot Koutons fell by 24,97% and, at the same time but in Hong Kong, Esprit increased by a humble 0.12%.