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H&M to open more international stores as profits surge H&M pushes ahead with new stores amid disappointing sales growth
(about 1 hour later)
Swedish fashion retailer H&M has beaten analysts’ forecasts as it pushes ahead with rapid international expansion.Swedish fashion retailer H&M has beaten analysts’ forecasts as it pushes ahead with rapid international expansion.
The world’s second-largest clothing group after Spain’s Inditex, the owner of Zara, made after-tax profits of SKr3.6bn (£284m) in the quarter to 28 February, up 36% on a year earlier. However it warned about the impact of the strong dollar on its sourcing costs. The clothing group, the second-largest in the world behind Spain’s Inditex, the owner of Zara, has announced plans to open 400 new stores this year, mostly in China and the US.
The group plans to open 400 new stores this year, mostly in China and the US. Last year it opened 379 outlets and this year’s expansion plans would push the number of stores worldwide to around 3,950. H&M is pushing into new markets including Peru, Macau, South Africa and India. In February it opened its first store in Taipei, Taiwan. Despite this, it admitted that “spring hasn’t really kicked in” after figures revealed disappointing recent sales growth.
H&M plans to open a new flagship store on Herald Square in New York next year, which will be one of its largest shops worldwide at 5,700 sq m. It opened one on Fifth Avenue last year, with the store front (and H&M handbags) decked out in images of Jeff Koons’ yellow Balloon Dog sculpture. Its after-tax profits were SKr3.6bn (£284m) in the quarter to 28 February, up 36% on last year.
However, sales growth has slowed. Sales in local currencies were up 9% in the first three weeks of March, after climbing 15% in the first quarter. H&M also warned that the strong dollar would drive up its sourcing costs this year. The retailer makes most purchases in dollars but a large chunk of its sales are in euros, and it reports its results in Swedish krone.
The strong dollar will gradually drive up the company’s sourcing costs, it warned. Those costs are in other currencies such as the dollar, while it reports in Swedish krona.
Countries where H&M will start selling its clothes online this year include Portugal, Belgium, and Switzerland, including some states in eastern Europe. H&M opened 379 outlets in 2014 and the planned expansion would bring the number of stores worldwide to around 3,950. H&M is pushing into new markets including Peru, Macau, South Africa and India. It opened its first store in Taipei, Taiwan, in February.
“We have made a very good start to 2015,” H&M chief executive Karl-Johan Persson said. “Our attractive customer offering and strong expansion both through stores and online, as well as our work on continuous improvement, are among the reasons for increased market share gains and good profits.” The company intends to unveil a new flagship store on Herald Square in New York next year, which will be one of its largest shops at 5,700 sq m. It opened one on Fifth Avenue last year, with the store front (and H&M handbags) decked out in images of Jeff Koons’ yellow Balloon Dog sculpture.
The retailer plans to open 100 new home departments selling furnishings and home accessories. It has branched out into sportswear and extended its shoe range. A new beauty range is slated for this autumn. However, sales growth has slowed. Sales in local currencies were up 9% in the first three weeks of March, which analysts described as disappointing, after climbing 15% in the first quarter.
H&M chief executive Karl-Johan Persson said: “It’s been a tough market. Spring hasn’t really kicked in.”
Battling competition from Inditex and discount chains such as Primark, H&M is investing heavily in online sales, new ranges, designer collections and higher-end brands such as COS.
Places where H&M will start selling its clothes online this year include Portugal, Belgium, Switzerland and most of eastern Europe. It plans to open 100 new home departments offering furnishings and home accessories. The company has branched out into sportswear and extended its shoe range, while a new beauty collection is slated for this autumn.
There was the usual scrum when a clothes range designed by Alexander Wang for H&M went on sale in November, marking 10 years of designer/high street collaborations. In November 2004, H&M signed up Karl Lagerfeld to design cut-price versions of his clothes.There was the usual scrum when a clothes range designed by Alexander Wang for H&M went on sale in November, marking 10 years of designer/high street collaborations. In November 2004, H&M signed up Karl Lagerfeld to design cut-price versions of his clothes.