Swedish fast fashion retailer H&M’s sales did not reach expectations in the first quarter as the unfavourable weather and tough economic climate hit revenues.
In the three months to February 28 sales increased by 6%, however when taking into account calendar effects and conversion into Swedish Krona sales rose by just 2% to SEK 28,392m (£2,889m).
Like-for-like sales fell 3% in the period.
Profit after tax also dropped from SEK 2.74bn (£279m )in the same period last year to SEK 2.46bn (£250m). Gross margins dropped by 0.5 percentage points.
Chief executive Karl-Johan Persson said: “The first quarter has been characterised by the continued challenging situation for the fashion retail industry in many of our markets mainly due to a continued tough macro-economic climate, but also due to unfavourable weather during parts of the quarter. This meant that sales in the first quarter did not reach our expectations.”
Despite the challenging environment H&M is ramping up its rate of expansion to around 350 new stores compared with the originally planned 325.
He added: “Our new fashion brand & Other Stories has been tremendously well received at its launch this March. Sales, both in stores and online, have far exceeded our high expectations. This clearly shows that the long-term work behind the development of & Other Stories has been completely right. This opens the possibility that & Other Stories can expand more widely and faster than we originally planned. We see great potential for & Other Stories in both the short and the long term, and are convinced that our new brand will become an important part of the H&M Group.”