Germany slowdown drags online traffic for Zalando and H&M - JPM

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05/06/2023 08:00

** J.P. Morgan says weak online trends in Germany weigh on
Zalando  ZALG.DE  and H&M  HMb.ST  in the European General
Retail space
    ** Traffic trends for Zalando, H&M and About You  YOUG.DE 
as well as weekly data from industry publication
Textilwirtschaft show a slowdown in Germany in May, it notes
    ** It adds Zalando to its negative catalyst watch list due
to double-digit declines in May traffic, which compares to
consensus forecasts for low-single-digit percentage growth in Q2
2023
    ** JPM still believes that "weaning customers off the
'discount drug'" could prove harder than expected for Zalando,
it says, with risk of a possible impact to sales and/or gross
margin
    ** A May decline in global website visits for H&M, also on
the broker's negative catalyst watch, widens the
underperformance of the world's second-biggest fashion retailer
vs. Inditex-owned label Zara  ITX.MC , the broker notes 
    ** It flags persisting weakness for Asos  ASOS.L  and boohoo
 BOOH.L , despite some improvement in the UK
    ** For May, it points to a slowdown in M&S  MKS.L  website
visits, stable weak levels month-on-month for homeware retailer
Dunelm  DNLM.L , and weak app traffic but "steadily improving
website visits" for online card retailer Moonpig  MOONM.L  

 (Reporting by Linda Pasquini)
 ((Linda.pasquini@thomsonreuters.com))