Sweden’s H&M profits down as bricks and mortar turnover falls

Stockholm: Swedish fast fashion giant Hennes and Mauritz reported lower quarterly earnings on Thursday as rising web sales failed to offset a slowdown in store turnover.
Net profit for the three months to end-August, the third quarter of the retailer’s financial year, came in at 3.84 billion kronor (400 million euros, $470 million), a drop of 20 per cent. Sales grew 4.6 per cent to 51.23 billion kronor.
The results were in line with analysts’ forecasts, but the retailer’s shares dropped sharply in Stockholm in reaction.
“The fashion retail sector is growing and is in a period of extensive and rapid change as a result of ongoing digitalisation. The competitive landscape is being redrawn, new players are coming in and customers’ behaviour and expectations are changing, with an ever greater share of sales taking place online,” CEO Karl-Johan Persson said in a statement.
“This shift is clearly reflected in our online sales, which continue to develop very well. However, our growing online sales did not fully compensate for reduced footfall to stores in several of our established markets, which has resulted in our total sales development not reaching our targets so far this year,” he said.
An “aggressive” summer sale policy brought stocks down, and the autumn collection got off to a good start, he said, but sales slowed towards the end of September.
The group’s online sales currently represent up to 30 per cent in some of H&M’s established markets, and Persson said online sales were expected to rise by at least 25 per cent per year in the future. — AFP