Advertise with fastmoving.co.za
 
 

H&M has recorded a 20 percent fall in its third quarter profit despite a rise in sales, as summer discounts hurt margins.
H&M has recorded a 20 percent fall in its third quarter profit despite a rise in sales, as summer discounts hurt margins.

H&M profits drop & sales slow down

INTERNATIONAL NEWS

By Elias Jahshan - Sep 29th 2017, 13:41

H&M has recorded a 20 percent fall in its third quarter profit despite a rise in sales, as summer discounts hurt margins. 

Net profit for the three months to August 31 came in at 3.84 billion kronor (£351 million), which H&M said had been affected by large markdowns as the retailer tried to clear inventory.

Pre-tax profit also fell 20 percent in the same period, down to 5.02 billion kronor (£460 million). Analysts had expected a fall of 21 percent, according to a Reuters poll.

Meanwhile, sales including VAT across the Swedish company – which also has fascias & Other Stories, Cos, Arket, Weekday, Monki and H&M Home in its network – grew five percent to 59.38 billion kronor (£5.4 billion).

In the first nine months of its business year, H&M’s group sales including VAT rose seven percent to 173.3 billion kronor (£15.9 billion).

However, the sales growth is still well below H&M’s new annual target of 10-15 percent.

“The fashion retail sector is growing and is in a period of extensive and rapid change as a result of ongoing digitalisation,” chief executive Karl-Johan Persson said.

“The competitive landscape is being redrawn, new players are coming in and customers’ behaviour and expectations are changing, with an ever greater share of sales taking place online."

“This shift is clearly reflected in our online sales, which continue to develop very well. However, our growing online sales did not fully compensate for reduced footfall to stores in several of our established markets, which has resulted in our total sales development not reaching our targets so far this year."

“This is, of course, something that we are not satisfied with and which, among other things, resulted in us entering the third quarter with inventory levels that were too high.”

H&M did not provide separate figures for its fascias, but said there had been “very good development”.

H&M is in the middle of setting up new online stores for the Philippines and Cyprus in the coming months, in addition to the six online markets that have already opened in 2017.

A new online store will also launch in 2018 for the lucrative India market.

The world’s second-largest retailer is also planning to open new physical stores in Georgia later this year, as in Uruguay and Ukraine next year.

“In our established markets we are focusing on optimising the store portfolio through renegotiation, rebuilds and relocations, adjustment of store space and through closures,” Persson said.

“Overall we will be closing around 90 stores during the year, resulting in a net addition of approximately 385 new stores."

“We still see good potential for more physical stores primarily in many of our growth markets.”
Retail Gazette 

Read more about: trade | sales | retail | profits | h&m

Related News

Checkers brings world-class retail to Constantia with new flagship store
27/11/2019 - 13:01
Checkers has opened the doors to its state-of-the-art 2 330 m² flagship supermarket at the Constantia Emporium as the retailer continues to take innovation to new heights.

Woolworths carves out market share in SA
27/11/2019 - 10:11
In Australia, David Jones's sales declined 2.1%, with the company saying a store refurbishment contributed to the decline.

Push and pull strategies work together to keep consumers coming back for more
26/11/2019 - 10:20
The retail sector is under increasing pressure as consumers have shrinking disposable income in a strained economy. Maintaining share of wallet is critical. Relying solely on a push route to market strategy from manufacturers into retailers is not enough to get consumers buying products. A pull strategy needs to coexist with the push to drive brand consumption. Integrating these strategies requires intelligent and insightful decision-making. This, in turn, requires data generated through smart technology which provides line of sight across the value chain from manufacturer to distribution, retailer to the consumer.

Exclusive leases must fall: Commission cracks whip on Shoprite, Pick n pay, Spar, Woolies
26/11/2019 - 09:57
The Competition Commission Inquiry into Grocery Retail, published on Monday, called for an end to the exclusive leases negotiated by national retail chains in all shopping malls across the country in a bid to open up access to markets for smaller players.

Today’s customers are loyal to speed and convenience, not brands
25/11/2019 - 11:15
Consumer expectations are rapidly shifting as technologies such as mobile, geolocation, social media and increasingly, Internet of Things devices and wearables, connect people to a world of easily accessible information and convenient services. With the ability to browse, compare and order with a few swipes and taps, consumers are becoming trained to value convenience and service above nearly anything else.