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Currency and discounting hit H&M profits

H&M group’s pre-tax profits dropped 17% to SEK16.6bn (£1.4bn) for the nine months to 31 August as a result of the strengthened dollar and increased discounting at the retailer.

The Spires in Barnet H&M unit

The Spires in Barnet H&M unit

The Spires in Barnet H&M unit

Group sales at the business increased 7% during the period.

Sales in September are expected to increase by 1% compared with the same month last year, as the warm weather “delayed” the start of the season.

H&M will launch website in Canada and South Korea this autumn 2016, bringing the total of new online markets added in 2016 to 11, and the total of markets worldwide to 35.

So far this year H&M has opened net 425 new stores, and entered Puerto Rico and Cyprus. New Zealand will get its first H&M store in October.

In 2017, H&M plans to open stores in four to five new markets, including Colombia, Iceland and Kazakhstan.

The H&M group plans to launch one or two new brands in 2017.

Karl-Johan Persson, CEO, said: “Sales were good in most of the markets up until mid-August. Thereafter sales were negatively affected by unseasonably hot weather, which continued into September, resulting in a challenging start to the autumn season.

“The sales performance in the third quarter and increased mark-downs as a result of a higher opening stock than planned had a negative impact on profit development. In addition, profits continued to be negatively affected by the strong US dollar effect on purchasing costs.”

 

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