Hennes welcomes soaring profits

Swedish mass fashion retailer Hennes and Mauritz (H&M) reported on Wednesday soaring second-quarter profits as its collections were well-received and operating costs were shaved.

Net profit in the second quarter – the three months to May 31 – ticked in at 2.35 billion kronor, up from 1.76 billion kronor for the same period last year.

That translated into earnings per share of 2.85 kronor, up from 2.13 kronor during the March-May period a year ago.

H&M’s pre-tax profits meanwhile jumped 34 percent to 3.62 billion kronor, up from 2.71 billion kronor for the year-ago-quarter and slightly above analyst expectations of 3.58 billion kronor.

“Well received collections during the quarter have resulted in an increase in turnover,” which rose 17 percent to 15.49 billion kronor, and 18 percent after adjusting for exchange rate changes, the company said.

“The cost control has at the same time continued to work well,” it said.

For the first six months of the financial year, covering December to May, H&M posted a net profit of 3.85 billion kronor, nearly 32 percent higher than the 2.92 billion kronor it reported a year ago.

H&M’s earnings per share were 4.66 kronor over the period, up from 3.53 kronor.

H&M’s gross profit margin meanwhile rose to 60.1 percent, up from 58.4 percent during the second quarter a year ago.

“The strengthening of the gross margin… has been possible due to lower quota costs, lower dollar rate and also lower price reductions which is a result of better collections and a well balanced stock-in-trade,” H&M said.

During the first half of the year, the company said it had opened 62 new stores worldwide, bringing its total number of branches to 1,121.

Over the next six months, H&M said it would open another 85 to 90 stores, mainly in the US, Germany, the UK, Spain and Poland.

Eleven stores are to be closed.



H&M competitor to sponsor Sweden’s Olympic team

Six months after establishing itself in Stockholm, Japanese clothing brand Uniqlo has announced it will sponsor Sweden’s athletes at the 2020 Olympics.

H&M competitor to sponsor Sweden's Olympic team
Anna Hasselborg of Sweden's curling team tries out new kit supplied for the country's athletes by Uniqlo. Photo: Henrik Montgomery/TT

The clothing chain, one of the world’s fastest-growing retail companies, is also set to open more stores in the Scandinavian country.

“Swedes are so sophisticated and warm-hearted,” Uniqlo Europe CEO Taku Morikawa said, stressing how welcome his company has been made to feel.

Morikawa was in Sweden to present the partnership between Uniqlo and the Swedish Olympic Committee at an event at Uniqlo’s store on Hamngatan in Stockholm.

Sweden’s athletes wore teamwear supplied by H&M at the last two Olympic Games.

The Stockholm store, Uniqlo’s first in the Nordic region, opened its doors in August 2018. An expansion is now planned on the Swedish market, although Morikawa declined to reveal where.

“We definitely have plans to open more stores here,” he said.

A store will also open in Danish capital Copenhagen in the coming spring as Uniqlo’s holding company Fast Retailing continues its global expansion.

Sales figures in Sweden’s clothing retail sector have seen a downward trend in recent years, with an exception in 2015.

H&M is usually cited as one of Uniqlo’s main competitors.

The impact of a new player on an already-competitive market is difficult to predict, according to the Swedish Trade Federation (Svensk Handel).

“Locally, competition is sharpened, but competition is already fierce. I would be inclined to say that this type of partly new concept store can, instead, help to revitalise the physical retail sector for clothing,” the association’s head economist Johan Davidson said.  

READ ALSO: H&M profit down sharply despite rise in online sales