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Profits surge at H&M

Profits at Swedish fashion giant H&M rose 26% for the year to November 30 as the business continued its expansion drive.

Profit after tax was SEK13.6 billion (£1.08bn) for the period, on net sales of SEK78.35bn (£6.26bn), an increase of 15%.

The company said sales in December had grown by 10% and that trading remained strong. Sales up to and including January 29 were up 16%.

The retailer, which opened 193 stores during the year, including its first stores in China, Greece, Slovakia and Qatar, is planning to open two shops in Russia, with the first opening scheduled for Moscow in 2009.

Other new franchise markets will be Egypt, Saudi Arabia, Bahrain and Oman, with retail partner Alshaya. The chain will also open its first stores in Tokyo in Japan in the autumn.

This year H&M will open 190 shops, mainly in the UK, Italy, Spain, France, Germany and the US.

The company said it expected to spend the same amount of money on store refurbishments this financial year as it did in 2006/2007.
It said it would also unveil three more of its higher-end COS stores, which debuted last year and now total 11. The new stores will be in Paris, Cologne in Germany, and an as-yet unnamed location.

H&M investor relations manager Nils Vigne said: “Our plan was to open 10 COS stores last year and we opened 11. They have had a great response from shoppers, but it is very important that the concept is given time to develop and we have the resources to do that.”

The company also said it will increase its commitment to organic cotton. It said that more of the fabric was used in its spring 08 collections than was used in the whole of last year’s range.

Gross margin for the year rose from 59.5% to 61.1%, with operating margin rising from 22.4% to 23.5%.

In Germany, the retailer’s biggest market, gross sales increased by 11%, adjusted for local currency to SEK22.15bn (£1.77bn) over the period, with growth in Sweden and the UK 8% and 9% respectively.

H&M added that the expansion of its online and catalogue sales and stores in Germany, Austria and the Netherlands had exceeded its expectations.

To support online and mail-order expansion, a new logistics centre in Poznan in Poland has started to serve stores in eastern Europe and the online and catalogue stores outside the Nordic region.

Another logistics centre to serve Germany, the Netherlands and Austria is under construction in Hamburg.

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