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H&M set to expand as profits climb

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10:08 CEST+02:00
Swedish cut-price fashion clothing group H&M bucked the economic gloom on Thursday, reporting a four percent hike in third quarter profits and announcing an expansion of its chain of stores.

Hennes & Mauritz stated that the group will open 240 stores this year, up from a previous target of 225. Net profit in the three months to August rose to 3.46 billion kronor ($504 million), in line with analyst forecasts according to a poll by Dow Jones Newswires.

Sales rose 13 percent on the corresponding period of 2008 to 23.55 billion kronor, slightly below analyst estimates and indicating a downturn of 6 percent with the exclusion of new stores.

"Weak sales were mainly due to continued recession with restrained consumption, tough price competition and unusually warm weather in many parts of Europe in the end of the quarter," the firm said in a statement.

The company, ranked third in the fashion retail world behind America's Gap and Zara in Spain, said most of the new stores would be opened in the United States and western Europe.

At end-August, H&M operated 1,840 stores in 27 countries.

But despite the positive profits and expansion optimism the markets gave a lukewarm reception to the firm's figures and by 10am H&M stock had fallen by just over 3 percent on the Stockholm stock exchange.

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