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H&M readies launch of new brands

Swedish fast fashion giant H&M Group has confirmed it will launch “one or two” new brands in 2017, and is now focused on growth within its existing store estate and online rather than new bricks-and-mortar space.

Drapers exclusively revealed in November that the group had agreed to take the Banana Republic store on London’s Regent Street for a new brand concept, although a spokeswoman declined to provide further details.

The group previously aimed to increase the number of new stores it opened by 10-15% a year, but it will now target a sales increase of 10-15% in local currencies each year. H&M said it will still look to add around 430 net stores to its existing 4,300-strong portfolio over the coming year.

It comes as group sales including VAT increased by 6% to SEK222,865m (£20.2bn) for the year to 30 November, but profit after tax fell 10.8% to SEK18,636m (£1.7bn).

The firm said profits were hit by increased markdowns and higher purchasing costs caused by the strengthened US dollar.

The group opened 427 new stores and in 11 online markets, ending the year with 4,351 stores in 64 markets and selling online to 35 markets. In addition to H&M, it reported strong sales growth for its other fascias Cos, & Other Stories, Monki, Weekday and H&M Home.

Sales including VAT grew 8% to SEK61,098m (£5.5bn) during the fourth quarter ended 30 November, while profit after tax increased 7% to SEK5,914m (£536m).

The group will launch in Kazakhstan, Colombia, Iceland, Vietnam and Georgia during the coming year and will enter Turkey, Taiwan, Hong Kong, Macau, Singapore and Malaysia online.

Chief executive Karl-Johan Persson said 2016 was a challenging year for fashion retail in general thanks to various external factors, including geopolitical events.

This was particularly visible in France, Germany, Switzerland and Italy as well as in the US and in China,” he said. “Since these markets represent a large share of our sales, this consequently had a great impact on our overall sales development.”

He added: “However, during the year we also identified areas within our customer offering, store experience and supply chain where we could have done better – and where we are now methodically ensuring improvements.”

The group said it is investing in RFID and automatised warehouses, and has started offering time-slot deliveries in Japan.

 

Readers' comments (1)

  • Disappointing to see European fashion retail dominating. Amazon next.

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