In the money: H&M ramps up investment in online, new stores
Swedish fashion retailer H&M Hennes & Maurtiz is planning to ramp up investment in its online systems and new stores in 2013.
The company, which is set to launch a new brand called & Other Stories in spring this year, plans to spend SEK7.5bn (US$1.2bn) on capital expenditure this year, a 10.3% increase from the SEK6.8bn spent last year.
The retailer's head of investor relations, Nils Vinge, told analysts on Wednesday (30 January) that the retailer has been making a number of "long term investments". These include developing its online offer in the US, which is set to launch in summer, as well as in other markets, launching a mobile site, opening new stores and broadening its range.
While the company opened 304 stores in 2012, 29 more than initially planned, it intends to ramp up expansion further in 2013, with 325 more new stores planned.
China and the US are set to remain the focus of much of the growth in 2013, but the company will enter five new markets over the course of the year - Chile, Estonia, Lithuania, Serbia, and Indonesia through a franchise deal.
& Other Stories is also set to launch in the spring, with the first stores to open in Barcelona, Berlin, Copenhagen, London, Milan, Paris and Stockholm. The line will also be offered online in Belgium, the Netherlands and Finland.
Vinge said the range will include women's shoes, accessories, cosmetics and clothing. It will have a "wide price range, carefully chosen qualities and a great attention to detail."
The investor relations officer was cagey when asked how the retailer might look to broaden its range - he speculated it could mean new brands, or extending current brands into new categories like shoes or homewares.
The comments came as H&M saw full year net profit rise 7% to SEK16.8bn, and sales increased 10% to SEK120.8bn. Comparable sales increased 1% over the year.
During the fourth quarter, net profit fell slightly to SEK5.28bn from SEK5.35bn in the same period of the prior year. Total sales increased 5% to SEK32.5bn, but were flat on a comparable basis.
Fourth quarter operating margin fell from 21.5% to 20.1%, which Vinge attributed to sales not rising as much as expected, and the company's decision to offer the "best quality product" in every market.
Vinge emphasised that the retailer continues to "stand strong" but that 2012 was more challenging than 2011, with macroeconomic uncertainty, particularly in the EU, leading to weakness in apparel.
He said the performance was "satisfactory" given the macroeconomic headwinds it faced during the year.
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