H&M, the Swedish fast fashion chain, said profits for its fourth quarter dropped 2.4% as the retailer experienced one of the “toughest years for a long time for the fashion retail industry”.
For the three months to November 30 net profit slipped 2.4% to 5.36bn kronor (£505m) from 5.49bn kronor (£517m) a year earlier. Fourth quarter revenue, excluding VAT, was 30.95bn kronor (£2.91bn), up from 29.71bn kronor (£2.80bn) last year.
For the full year to November 30 group sales including VAT rose by 8%, however like-for-like sales dropped 1%.
Chief executive officer Karl-Johan Persson said the retailer “stands strong” in a challenging market as H&M continued to gain market share in what he called “one of the toughest years for a long time for the fashion retail industry in many countries.”
Persson added: “The situation in the sourcing markets has also been challenging. Cost inflation has been high resulting in increased purchasing costs for the fashion retail industry. Despite increased purchasing costs, we chose a strategy of strengthening our customer offering and market position even further relative to competitors.
“The investments have varied over time and have involved everything from even better prices to even higher quality and more sustainable materials. We are convinced that this will gradually become more evident to customers and will strengthen H&M’s already strong market position even further.”
H&M, which opened 266 new stores in its last financial year, is planning for strong expansion in 2012 with approximately 275 new stores across countries including the UK, the US and China.
Persson said the new year had started well with strong sales, however he added: “Most indicators suggest that the macro-economic climate in many of our markets will continue to be tough during 2012.”