SWEDEN: H&M Q4 earnings up but margins disappoint
H&M saw its gross margin fall in Q4
Swedish fashion retailer Hennes & Mauritz (H&M) has booked fourth-quarter profit that missed analyst expectations and "disappointing" margins but said it remains optimistic for 2014.
The budget retailer posted a pre-tax profit of SEK7.34bn (US$1.13bn) in the three month period, an increase of 11% on last years SEK6.64bn. The figure, however, missed Reuters analyst forecasts for SEK7.6bn.
Gross margin fell to 60.8% from 61.6% in the corresponding period last year, primarily due to currency exchange rate effects.
"These disappointing margin performances support our thesis that H&M will need to continue to lower prices in order to compete with lower priced rivals and suggest that the company has increased investment, notably in online shopping, IT, and the new brand '& Other Stories', leading to lower gross margins," said Bernstein analysts.
Sales, however, climbed 6.5% to SEK150.1bn from SEK140.95bn in the prior year period. The retailer said it expects sales to increase 15% in January after a 10% increase in December, the first month of its fiscal first quarter.
CEO Karl-Johan Persson said he was optimistic for 2014.
"The financial year 2014 has got off to a good start, with strong sales development in December and January. Although there are still macro-economic challenges in several of our markets, we are optimistic about 2014 which will be an exciting year with new countries and new opportunities. We have a strong belief in our offering and are convinced that we will strengthen our market position even further during the year."
H&M said it plans to open around 375 stores in its new financial year and that Australia and the Philippines will become new countries for the group this year. A couple of other new markets are also planned at the end of the year.
"France will open in spring/summer 2014. An additional three large online markets are planned to open later in the year," it said.
H&M's share price was down 3.24% to SEK277.90 at 08:50 GMT.
Future forecasts and historic market data can improve market and strategic planning- Understand which channels and products will be the major winners and losers in the coming years. Know the share of...
New York & Company, Inc. - Strategy and SWOT Report, is a source of comprehensive company data and information. The report covers the company’s structure, operation, SWOT analysis, product and service...
Cone Denim has agreed a new R&D collaboration with DSM Dyneema, which it says opens up tremendous opportunities for its expanding line of performance denims....
This report analyzes the worldwide markets for Children's Wear in US$ Million by the following Product Segments: Boys Wear, Girls Wear, and Infants & Toddlers Wear. The report provides separate compre...
Down supplier and processor Allied Feather & Down has unveiled a new consumer tracing resource called Track My Down....
- Yuan devaluation impact mixed for garment firms
- Will Vietnam struggle with impending trade deals?
- The new age of disruption on apparel production
- China devaluation: what’s the big deal?
- Gap bullish on China growth opportunities
- US Q2 in brief: J Crew, Aeropostale, Bebe Stores
- Luen Thai to continue investment in Vietnam
- Gap restructuring weighs on Q2 as profit falls 34%
- Ralph Lauren debuts biometic smart shirt
- China market woes could hit consumer spending
- Global Database of the Top 1000 Apparel Producers - Company Names, Financial Performance, and Contact Details
- Myanmar's Garment Sector in 2015 - now with updated members' directory
- Ethiopia – the emerging textile and clothing industry
- Global market review of lingerie - forecasts to 2020
- Global market review of swimwear - forecasts to 2019