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H&M, JD Sports and French luxury stocks

By FashionUnited

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Markets closed mixed Wednesday, after

European stocks turned lower ahead of a keenly anticipated decision on US monetary policy and a speech from Federal Reserve (FED) Chairman Ben Bernanke. Corporate main news was led by H&M, JD Sports and Hermès and LVMH.

While Asian markets traded at low, with the Hong Kong listed stocks finished 1.13 percent lower on Wednesday, hit by reports that property tax trials will be launched in China this year in a bid to cap soaring prices. The benchmark Hang Seng Index lost 238.99 points to a close of 20,986.89. Meanwhile, Chinese stocks also closed down 0.73 percent, with the Shanghai Composite Index on the front foot for losses with a drop of 15.84 points to 2,143.45 on turnover of 67.1 billion yuan.

In Europe, main actors were H&M, JD Sports and French luxury titans Hermès and LVMH, involved a new screw turn for the ownership of the former.

Hennes & Mauritz AB shares put in a strong performance despite the Swedish fashion retailer reporting second-quarter net profit that fell more than analysts had expected. “This quarter has been marked by substantial negative currency translation effects, which have had a negative impact on both sales and profits in Swedish crown. Sales in local currencies increased by 5 percent,” summarized the fashion group financial state its CEO, Karl-Johan Persson. “Although sales remained strong in Asia, overall sales were not satisfactory mainly due to the continued challenging situation for the fashion retail industry as well as unfavourable weather in March and a couple of weeks into April in many of our big markets,” he added.

Meanwhile, British athletic apparel chain JD Sports has closed more than 120 stores as part of plans to cut the estate down to about 80 Blacks and 60 Millets outlets. Its recently acquired outdoors divisions have weighted the group's performance and this news also dragged JD’s shares.

Trading in its core UK and Irish sports shops remains “robust”, with like-for-like sales up 7 percent. Noteworthy that these figures now include Irish sports chain Champion, which JD acquired in 2011. Meanwhile its fashion brands Bank and Scotts suffered a 5 percent drop in like-for-like sales during the period.

Nevertheless and as reported by ‘Proactive Investors’, JD Sports (LON:JD.) is worth browsing, says Bethany Hocking at Investec. She highlighted the strong showing from the sports retail division, which helped offset weaker sales from fashion and outdoor. “The core business is performing well and the sector discount remains significant,” she said.

Elsewhere, Hermès has yet again accused conglomerate LVMH, this time of carrying out the “most important fraud in the history of the French stock market'' in a court filing, as quoted in the ‘Les Echos’ newspaper on Wednesday. LVMH has built this holding up to 22.6 percent prompting Hermès to accuse LVMH of surreptitiously trying to add the Birkin handbags manufacturer to the luxury's group's portfolio of brands. In its accusation at a French business court, Hermès accuses LVMH of using highly complex financial instruments set up by top French banks that enabled it to conceal its buying spree from French regulators.
FashionUnited