H&M speeds up US expansion

Hennes & Mauritz, the Sweden-based fashion retailer, said it planned to speed up its expansion into the US due to the initial success of the stores it has opened in the country. H&M launched its third shop in New York on Thursday. The company said that only two weeks after the first US store started trading, the signs were that both margins and sales were strong. Carl-Henric Enhöring, H&M financial manager, said the launches in the US and Spain had gone "very, very well - very much better than expectations". "Because of the success [in the US] we will try to increase the speed of development, although it is still very much a question of finding locations," Mr Enhöring said. The news came as the company produced its first-quarter results, confirming last month's disappointing provisional figures. H&M's shares fell more than 30 per cent on March 23 following a profit warning and the resignation of chief executive Fabian Mansson. On Thursday, the most commonly traded B share closed up SKr2 at SKr236, still well below the high of SKr345 before the profit warning. In the three months to February 29, pre-tax profit fell to SKr671m ($77.3m) compared with SKr759m the previous year. Sales rose 14 per cent to SKr8.27bn. Mr Enhöring said that price mark-down on garments had been too high in the quarter reflecting the high levels of inventories. He also said the company needed to refocus on cost control - something it had partially lost sight of due to the rapid expansion. "Half the staff have never experienced a slowdown and we have to be very cost-conscious," he added. CSFB analyst Tony Shiret said the cost of launching into new markets would continue to hit profits as would currency effects as H&M was buying up to half its products in US dollars while selling them mainly in euro markets.