H&M profit down sharply despite rise in online sales

Swedish ready-to-wear giant Hennes & Mauritz (H&M) said on Thursday its 2018 earnings fell sharply due to restructuring costs but online sales rose.

H&M profit down sharply despite rise in online sales
File photo: Shoppers browse items at an H&M store in Manhattan. Photo: Drew Angerer/Getty Images/AFP
Net profit tumbled 22 percent in its December 2017 to November 2018 year to 12.65 billion kronor (€1.2 billion, $1.4 billion) although total sales were up five percent to 210.4 billion kronor.
Online sales rose 22 percent, the company said.
“It was a complicated year for H&M and the sector generally but after a difficult first quarter, there are signs that our efforts to transform the business are beginning to bear fruit,” it said in a statement.
Analysts say H&M, which built a major presence on high streets around the world, struggled to get its online strategy in place and so has lagged its peers.
In the last three months of its financial year, the company said it had opened three new order centres so as to speed up deliveries to customers.
“We have also completed our restructuring in line with the investments made in 2018… all our online sales are now on the same platform,” it added.
In recent years H&M has had to cope with a build-up in stock levels — which increased again by 10 percent last year, forcing it into price cutting which hit profitability.
H&M, which has nearly 5,000 stores worldwide, said it expects a net increase of 175 this year.
The company announced earlier this year that it would open more physical stores so as to counter fierce competition from online sales platforms.

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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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