Swedish H&M achieved operating profits of $196 million during Q1

H&M, the world’s second-largest listed fashion retail chain, reported better-than-expected first-quarter operating profits on Wednesday thanks to a smaller-than-expected decline in sales.

According to Reuters, the operating profits of the Swedish group amounted to 2.08 billion kroner ($196 million), compared to 725 million for the same period of the previous year, a significant difference from the 1.43 billion that analysts expected in a survey conducted by the London Stock Exchange Group.

Sales fell by 2%, which was better than analysts expected, while sales at the beginning of the second quarter rose by 2% in an indication of increased demand for clothing and accessories.

“Quarter sales gradually improved during February with the spring collections being well received, which is a positive sign that we are on the right track,” said CEO Daniel Ervier, who took over the position two months ago.

H&M announced that it aims to reach an operating profit margin of 10% over the course of this year.

At the same time, the company said in a statement today, Wednesday, that it is monitoring developments in the Red Sea and is working to limit their impact on the availability of the company’s products, shipping costs, and inventory levels.