Strong dollar weighs down H&M's profit

Swedish fashion group H&M‘s turnover in its fiscal year 2016, which ended on 30 November, grew 7 %, but a strong dollar and an increased amount of discounts led to a lower profit compared to the year before.

Focus on expansion

H&M’s 2016 turnover grew to 222.6 billion Swedish krona (23.6 billion euro), but despite that beautiful growth, its post-tax profit dropped to 18.6 billion Swedish krona (2 billion euro). The company points to higher costs because of the stronger dollar and more in-store discounts to explain the profit drop. On the other hand, H&M did expand a lot as well, adding 427 stores in 2016, up to 4,351 stores in 64 markets now. Its online presence also grew considerably, up 11 countries to 35.

The company will keep its focus on expansion in 2017 as well, hoping to open 430 new stores, with firsts in Kazakhstan, Columbia, Iceland, Vietnam and Georgia, but at the same time, it will took a look at its current store network and possible move or close onerous stores. 

Most of the new stores will be H&M stores, but about 70 to 80 will be affiliate brands.  Its online expansion will also continue in 2017, with another 6 new markets. All in all, based on its enlarged store network and online reach, the company expects turnover to grow another 10 to 15 % in its current fiscal year.