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H&M group sales up but profits slip

H&M group’s sales including VAT increased by 9% to SEK 64bn (£5.6bn) in the three months to 31 August.

Its ongoing transition to digital contributed to gradually improved sales and increased market share. However, profit after financial items fell 25% to SEK 4bn (£346m). Gross profit was up 6% to SEK 28bn (£2.4bn), while gross margin slipped from 51.4% to 50.3%.

The group said it encountered difficulties arising from the implementation of a new logistics systems in the US, France, Italy and Belgium throughout the spring. This led to extraordinary costs of around SEK 400m (£34m) in the third quarter (June to August). Sales in these markets decreased by 8% overall, while overall sales for the group’s 66 other markets increased by 8% in local currencies.

For the nine months between December and August, H&M group’s sales including VAT increased by 3%, to SEK 178bn (£15bn).

CEO Karl-Johan Persson said: “The rapid changes in the fashion industry are continuing, and the H&M group is in an exciting transitional period. Our transformation work has contributed to a gradual improvement in sales development, with increased market share in most markets during the third quarter, particularly in Germany, Sweden, Eastern Europe, Russia and China.

“As always, we have a long-term perspective. Our improvement work is continuing and, although many challenges remain, there are more and more indications that we are on the right track. We are therefore positive about the future and the opportunities that exist for the H&M group.”

Readers' comments (1)

  • Small sales growth but with 25% reduced profits. A worrying trend.

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