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H&M profits fall again on higher materials and wages | H&M profits fall again on higher materials and wages |
(40 minutes later) | |
Budget fashion chain H&M has said profits fell again in the second quarter of the year as both cotton prices and wages rose. | Budget fashion chain H&M has said profits fell again in the second quarter of the year as both cotton prices and wages rose. |
Even so, Hennes and Mauritz, the world's second-largest fashion retailer, said its gross profit margin fell from 65.9% a year ago to 61.7%. | Even so, Hennes and Mauritz, the world's second-largest fashion retailer, said its gross profit margin fell from 65.9% a year ago to 61.7%. |
Profits at the Swedish company fell 18% to 4.3bn kronor ($673m, £415.4m). | |
The figures contrast with rival Zara, which has escaped the problem of Asian wage inflation. | |
Its parent company, Inditex, last week reported quarterly profit up by 10%. It makes more of its clothes in North Africa and Spain, so is less exposed to rising costs in Asia. | Its parent company, Inditex, last week reported quarterly profit up by 10%. It makes more of its clothes in North Africa and Spain, so is less exposed to rising costs in Asia. |
H&M also said it had put aside a 248m Swedish crowns related to an incentive programme for employees. | |
The company's chief executive, Karl-Johan Persson, said: "Increasing interest rates, higher energy prices and austerity measures in many economies have decreased consumer spending power." | The company's chief executive, Karl-Johan Persson, said: "Increasing interest rates, higher energy prices and austerity measures in many economies have decreased consumer spending power." |
But he added that the company had continued to gain market shares in what he described as "a very challenging market". | But he added that the company had continued to gain market shares in what he described as "a very challenging market". |
Most of the company's shops are in Europe, where economies are largely stagnant. | Most of the company's shops are in Europe, where economies are largely stagnant. |
H&M said it had not raised prices throughout the three-month period. | H&M said it had not raised prices throughout the three-month period. |
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