Profits H&M Group take another hit

Swedish fashion group Hennes & Mauritz has published a fourth consecutive quarterly turnover that was lower than expectations. The group that owns chains like COS, Monki and &Other Stories saw its profit drop by 21 %, despite a (slightly) higher turnover.

“Exciting and challenging” times

While turnover rose by 2 % to 60.5 billion Swedish crowns (5.8 billion euro), net profit went down to 4.6 billion crowns (450 million euro) due to logistical problems in Belgium, France, Italy and the United States. In some of the Nordic countries online sales were lower than expected. In order to reduce its stocks, H&M had to lower the prices of many articles. 

H&M suffers from increasing competition by fast-fashion chain Zara and from web shops like Zalando and About You. “The rapid transformation of the fashion retail sector continues, and we are in a transitional period that is both exciting and challenging. Challenging because it is complex, extensive and the pace of change is fast. Exciting because we can see positive trends and big potential in connection with our improvement work and investments”, CEO Karl-Johan Persson said in the press release accompanying the quarterly results.

He does however see room for improvement: “We can see that things are moving in the right direction, even though many challenges remain and there is a lot of hard work still to do. The first half of the year has been somewhat more challenging than we initially thought, but we believe that there is a gradual improvement and that we will see a stronger second half. We have a long-term approach and are optimistic about the future for the whole of the H&M group, with good growth in both sales and profitability for many years to come.” H&M plans to open 390 stores this year, mostly in emerging markets, while 150 stores (in established markets) would be closed.