Profits down at H&M after weak sales
Swedish high street fashion retailer H&M saw its profit decline by 61% in the three months to 28 February after experiencing weak sales.
The company said profit was also impacted by an increased level of markdowns.
Karl-Johan Persson, H&M chief executive, said: “The rapid transformation of the fashion retail sector continues. As communicated previously, the start of the year has been tough. 2018 is a transitional year for the H&M group, as we accelerate our transformation so that we can take advantage of the opportunities generated by rapid digitalisation.
“Weak sales in the fourth quarter, partly caused by imbalances in the assortment for the H&M brand, resulted in the need for substantial clearance sales in the first quarter. The high level of clearance sales combined with unusually cold winter weather had a negative impact on the sales of the spring garments.”
H&M said its online store in India, which was launched in mid-March, has got off to a good start and the launch of H&M and H&M Home on Tmall in China on 21 March has exceeded expectations. In 2018, the retailer plans to enter the new markets of Ukraine and Uruguay.
It is also planning to launch a new brand called Afound which will be an off-price marketplace offering products from well-known and popular fashion and lifestyle brands, including those from the H&M group. Its first stores and a digital marketplace will open in Sweden.
Persson added: “We take a long-term view that together with our knowledge and experience enable us to navigate through times such as this. We look forward to telling you more about the H&M group’s continued transformation work, which will lead us back to healthy growth in both sales and profitability.”
