SHARE
COPY LINK

H&M

Massive expansion dampens H&M profits

Swedish clothing retailer H&M said Wednesday that its net profit rose by 6.6 percent to 16.9 billion kronor ($2.7 billion) in 2012 and that it increased its market share despite a difficult operating environment.

Massive expansion dampens H&M profits

Gross sales by the world’s number two clothing retailer rose by 9.4 percent to 141 billion kronor in the financial year that ended November 30th, but net sales measured at constant exchange rates gained only 1 percent, the company said.

“H&M continues to stand strong in a challenging clothing market, which in many countries has been even more challenging in 2012 compared to 2011,” chief executive Karl-Johan Persson said in a statement.

Shares in the company, meanwhile, fell by 2.9 percent on the Stockholm Stock Exchange after failing to meet analysts’ expectations in the final quarter of 2012.

The company said its earnings were hit by the costs of its long-term investments as well as negative currency exchange effects.

It proposed holding the dividend steady at 9.5 kronor per share.

H&M said its expansion moved faster than expected in 2012, with 304 new stores opening their doors, primarily in China and the United States.

The company which makes and retails inexpensive clothes currently has 2,800 stores in 48 markets and more than 104,000 employees.

It said it plans to open 325 stores in this financial year, including in Chile and in Indonesia via franchising.

H&M said its new fashion brand & Other Stories, targeted at women, will open its first stores in the coming months in seven European countries.

Persson said that despite not yet generating revenue the company believed its long-term investments “to be both necessary and wise as they aim to secure future expansion and profits and thereby further strengthen H&Ms position.”

AFP/The Local/og

Follow The Local on Twitter

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.

H&M

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

SHOW COMMENTS