Despite a 7 % turnover increase, Swedish fashion group Hennes & Mauritz was not able to meet its own first quarter forecast. At the same time, the launch of its new chain, ARKET, is approaching.
“Very rough market conditions”
The group’s first quarter turnover grew to 54.4 billion Swedish krona (nearly 5.7 billion euro), but that was below expectations for H&M, COS and & Other Stories’ parent company. “An increase of 7 percent, which was below our plan”, CEO Karl-Johoan Persson admits. “For fashion retail in general, market conditions were very tough in many of our large markets in central and southern Europe and in the US, and this was reflected in our sales.”
“In other markets, such as Sweden and the other Scandinavian countries, eastern Europe, Turkey, Russia, China and Japan our sales developed well and we continued to take market share”, he continued. “Sales at COS, & Other Stories, Monki, Weekday and H&M Home continued to develop very well both in stores and online, as did H&M’s online sales.” Between the lines, one could say that the H&M stores struggled.
After taxes, there is a first quarter profit of 2.457 billion Swedish krona (257.25 million euro), down 3.5 % compared to the year before, partially because of lower prices.
First ARKET opens in the fall
Obviously, the group is not just sitting idly by. With more than 4,400 stores in 65 countries, including a first in Kazakhstan and new store openings planned for Colombia, Iceland, Vietnam and Georgia later this year, it will also expand its online reach with another six web shops, in Turkey, Taiwan, Hong Kong, Macau, Singapore and Malaysia.
Aside from its store network expansion, it will also soon launch a brand new store chain, called ARKET. The very first one will open “after the summer of 2017 in London and online in eighteen European countries. Stores in Brussels, Copenhagen and Munich will follow afterwards.”
ARKET will “offer a broad yet selected range of essentials for men, women and children, as well as a smaller, curated assortment for the home.” Pricing will be slightly higher than H&M and the customer will also be able to eat and drink at an ARKET store. “The café will be based on the New Nordic Kitchen and its vision of quality ingredients and healthy living”, the press release states.