H&M is feeling the crisis
H&M pushed down on the pedal because of
the slower growth in the first quarter: “The first quarter has been
characterised by the continued challenging situation for the fashion retail
industry in many of our markets mainly due to a continued tough macro-economic
climate, but also due to unfavourable weather during parts of the quarter”,
says CEO Karl-Johann Persson.
This has put some pressure on the pricing:
gross margins for the period December-March dropped from 55.8% to 55.2%.
H&M closed its first quarter with a rise in sales of only 2% to 28.4
billion Swedish crowns (3.4 billion euro). Gross profits rose slightly to 15.7
billion Swedish crowns (1.87 billion euro), meaning a net profit of 2.5 billion
crowns or 298.6 million euro.
There is no improvement on the horizon, because
H&M is already announcing sales in March have suffered because of the bad weather in
Europe and the US, while a lot of stock remains on the shelves: H&M is
predicting a double-digit drop on a comparable base for this month.
New locations & a new face
Persson wants to turn that trend by
speeding up plans of expansion: instead of the earlier announced 325 stores by the
end of this financial year, H&M wants to open 350 new stores. Those will
also include locations for the new chain & Other Stories, because “Our new
fashion brand & Other Stories has been tremendously well received at its
launch this March. Sales, both in stores and online, have far exceeded our high
expectations. This opens the possibility that & Other Stories can expand
more widely and faster than we originally planned. We see great potential for
& Other Stories in both the short and the long term.”
H&M also acquired the services of American
pop icon Beyoncé, who will become the face of the new summer campaign. That
collection will feature beachwear by H&M, also having a bikini from the “H&M
for Water”-collection, with which the fashion giant tries to collect money for
WaterAid.
