Expansion costs dent profits at H&M
High street fashion retailer H&M has seen a fall in profits in its fourth quarter after the company invested in online shopping, IT and its new & Other Stories brand.
Group profit in the three months to end November 2012 was 5.29 billion kronor, down from 5.36 billion kronor in the same quarter in the previous year. Profit for the full year was 16.87 billion kronor, a rise of 7% on the same period last year.
Group sales rose to 37.9 billion kronor from 36.2 billion kronor in the fourth quarter of 2011.
H&M opened 304 stores in 2012 and entered five new markets. The retailer will open a further 325 stores in 2013 and will also launch the new & Other Stories branded stores in Spain, Germany, Denmark, UK, Italy, France and Sweden.
In addition, H&M launched a completely mobile-adapted H&M shop in its eight existing online markets.
Karl-Johan Persson, CEO, said: "Our long-term investments relate to a number of areas such as online shopping, IT, a completely new brand & Other Stories and future broadening of the product range. These long-term investments have created cost increases and to a great extent have not yet generated any revenue. However, we consider these investments to be both necessary and wise as they aim to secure future expansion and profits and thereby further strengthen H&M’s position."
H&M now operates over 2,800 stores in 48 markets. The retailer will enter five new countries in 2013 including Chile, Estonia, Lithuania, Serbia and Indonesia.
Persson added: "We are looking forward to an exciting 2013 full of opportunities. We have the greatest respect for the macro-economic climate and how it may affect the consumption in many of our markets, but we have a strong belief in our offering and are convinced that H&M will continue to maintain its strong position."
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