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.