Swedish fashion giant H&M is kicking it into the next gear: by the end of this financial year the world's second largest fashion group wants 350 more stores than the previous year (instead of the earlier announced 325). Among others there will be new locations of the new chain & Other Stories.
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.