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H&M group profits drop in ‘challenging’ year

H&M group, owner of brands including H&M, Cos, & Other Stories and Weekday has announced a 5% increase in net sales for the year to 30 November 2018, but profits after financial items fell by 28% to SEK 15.64bn (£1.32bn).

The rise in sales to SEK 210.4bn (£17.73bn) for the year was attributed to strong growth in online sales, which were up 22% to SEK 30bn (£2.53bn) and now comprise 14.5% of the group’s total. H&M group does not break down figures for each individual fascia.

Online growth was underpinned by heavy investments in logistics during the fourth quarter of the year (1 September to 30 November). Three new fulfilment centres opened during the period. However, costs incurred during the transition, as well as “negative end-of-year effects” totalled SEK 560m (£47.2m) during the fourth quarter.

Profits after financial items for the quarter were SEK 4.35bn (£370m).

H&M CEO Karl-Johan Persson said: “It has been a challenging year for H&M group and the industry, but after a difficult first half, there are signs the company’s transformation efforts are beginning to take effect.

“Improved collections generated better full-price sales and lower markdowns towards the end of the year. This gave us confidence to accelerate our transformation plans in the fourth quarter, with a particular focus on the upgrade of our logistics systems.This inevitably resulted in increased costs but will lead to a range of improvements for customers.”

Persson stressed that the group was ramping up its transformation plans, and said further investment in logistics and a reduction in capital expenditure would take place in the year ahead.

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