Hennes and Mauritz results disappoint analysts

Swedish retail clothing giant H and M on Thursday reported fourth-quarter earnings which, although improved, fell short of market expectations because of sluggish sales and increased costs.

Pretax profit for the three months to November 30, the company’s fourth quarter, was 4.297 billion kronor against 4.056 billion a year earlier.

But analysts had expected the profit line to rise to between 4.489 and 4.856 billion kronor, according to a poll by AFP’s financial newswire AFX News.

After weak sales early in the quarter, H and M, or Hennes and Mauritz, said that it had allocated extra resources to marketing which had increased operating expenses.

The retailer also cited re-introduced export regulations in China as a reason for rising costs of goods.

The price of shares in H and M was showing a fall of 1.9 percent to 264 kronor in late morning trading.

“The numbers are a touch light,” said one broker.

Quarterly sales, at 18.009 billion kronor and up from 15.874 billion kronor, were in line with expectations.

The group also announced further expansion plans, saying it hoped to open 150 new stores during the current financial year. The main areas of projected expansion are the United States, Spain, Germany, Britain, France and Canada.

The company also said it would boost online and catalogue sales, and had targeted the Netherlands as the first country outside the Nordic region for the expansion drive.

H and M’s gross margin of 60.0 percent, slightly up from 59.9 percent, was “very satisfactory”, the group said.

For the 12 months to November 30, H and M reported a pretax profit of 13.553 billion kronor, up 23 percent, on sales of 61.262 billion, 14 percent higher than the previous year.



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.  

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