SWEDEN: H&M Q3 profit hit by weather and economy
- Q3 profit after tax rose 0.9% to SEK3.6bn
- Sales increased 7% to SEK 28.8bn
- Margins declined to 58.2% from 58.6%
Low consumer confidence, poor weather and negative currency effects hit H&M Hennes & Maurtiz's third-quarter margins and earnings, the fashion retailer said today (27 September).
H&M admitted that trading continued to be "challenging" in many markets in the third quarter - both in regards to weather and the macroeconomic climate, with austerity measures and restrained consumption. Sales in June and July were strong, while sales in August were weaker due to the "extreme heat wave" across a number of European markets.
Profit after tax increased 0.9% to SEK3.6bn (US$546.3m) over the quarter ended 31 August, as margins declined to 58.2% from 58.6% in the same period of the prior year.
Sales increased 10% in local currencies but were up 7% in Swedish krona to SEK28.8bn. Currency translation effects had a SEK200m impact on profit after financial items.
The group is ramping up the pace of expansion, with plans to open 300 stores this year, up on the previously planned 275 stores.
However, the company said it would postpone its US e-commerce launch to summer next year. It originally planned to open the site in autumn this year. It attributed the delay to developing an m-commerce site as well as intensifying preparations of its online roll out in other markets.
H&M is also working to launch its new brand '& Other Stories' in Europe during spring 2013.
CEO Karl-Johan Persson said the brand is aimed at "women with an interest in fashion, who want to create their own personal style and focuses on the total look".
The new stores will offer a broad range of shoes, bags, jewellery, beauty products, lingerie and clothes. The collections are being created by a group of in-house designers from studios in Paris and Stockholm.
Describing the results as "weaker than expected", Bank of America Merrill Lynch analyst Richard Chamberlain said the retailer should "regain momentum" during the fourth quarter, due to a stronger top line combined with undemanding comparable sales.
"The main risk to margins in our view is the potential need for more investments in quality to sustain the top line," he added.
Despite booking a 9% rise in full-year underlying pre-tax profit, UK fashion retailer Next Plc was forced to admit that it had suffered a slow start to the new year. Here is a flavour of what leading ...
Questions have been raised over the explansion plans of H&M Hennes and Mauritz, after the retailer today (21 March) said it intends to open up to 350 new stores this year, 25 more than initially sched...
French apparel group PPR is changing its name to Kering as it looks to position itself as a luxury and sportswear business....
Retailer New York & Company returned to profitability in the fourth quarter and full year to 2 February, thanks to a 7.4% revenue increase....
Global sourcing giant Li & Fung Ltd has seen its full-year profit slump despite a slight rise in turnover, blaming ongoing restructuring costs and weakness in its distribution business....
H&M Hennes & Mauritz has become one of the first and largest clothing companies in the world to make its supplier factory list public, as part of ongoing efforts to promote transparency across its bus...
Clothing retailer H&M Hennes & Mauritz has seen first quarter net profit fall after a late spring hurt sales and profits were impacted by long-term investments. ...
Shop Direct Group, the UK catalogue and online retailer which operates the Littlewoods, Very and Isme businesses, has appointed Karl Doyle, former M&S trading director of kidswear, as group product di...
- Where next for 3D design and prototyping?
- What Marks & Spencer's numbers mean for clothing
- Apparel buyers miss out on commodity cost savings
- Balance essential in garment supply chain
- Tanzania adds to Africa’s apparel sourcing mix
- Brandix named PVH ‘Global Supplier of the Year’
- Earthquake damage at Bangladesh garment factories
- Ascena Retail to buy Ann Taylor owner for $2bn
- China and India to exploit trade relationship
- AGOA delays drag on sourcing decisions