H&M Has To Adjust Its Price Strategy When Confronted With Competitors' ZARA Oppression.

In view of the strong pressure from rival Zara parent Inditex group (IDEXY), Sweden's fast fashion H&M group (HNNMY) said it would follow the market trend to further price adjustment.

The Wall Street journal pointed out that investors may need to make preparations for H&M group's share price to continue to fall, and its stock has so far fallen by 26%.

The group's revenue, profit margin and its poor store performance in the first half of this year on Wednesday were investors worried.

Despite the decline in sales profit margins and uncertainty in the future development of same store performance, H&M group has consistently maintained an annual 10% expansion plan.

H&M started its annual report in 2014 to stop disclosing its same store performance to investors, instead of focusing on brand expansion and trying to establish online channels. But according to analysts at Credit Suisse, H&M's same store performance fell 5.3% in the second quarter of this year.

In a research report, analysts Jamie Merriman and Jennifer Wong pointed out: "when most fashion retailers complain about the negative effects of weather on the sales environment, the results of the Inditex group of ZARA parent company demonstrate the strong power of the business model and its ability to create outstanding performance."

Inditex group's first quarter turnover amounted to 4 billion 880 million euros, up 12% over the same period last year, which exceeded FactSet analysts' earlier estimate of 4 billion 840 million euros.

During the period from February 1st to April 30th, revenue rose 17% and net profit increased by 6% to 554 million euros.

Jyrki Tervonen, group chief financial officer, said that in order to make H&M still competitive in the future market, we will adjust the price of H&M products and try our best to provide consumers with the most valuable products.

However, he did not disclose the specific price adjustment and implementation time.

Developed rapidly in the past few years by poor quality and low cost.

Faced with the severe challenges of the retail market, H&M's profits plunged 21.5% to 7 billion 900 million Swedish kronor (about 945 million 500 thousand US dollars) in the first half of the year, and the pre tax profit plunged 22% to 10 billion 330 million Swedish Krona (about 1 billion 240 million US dollars). During that period, the turnover of tax revenue increased 5% to 104 billion 970 million Swedish kronor (about 12 billion 560 million dollars), which increased by 7% in local currency.

The same quarter last year nearly double digit growth rate, it is clear that H&M has entered a slowdown in the performance of the channel.