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H&M profits rise 8% - but misses analyst forecasts

H&M Group grew profits 8% in its first quarter – but failed to meet analyst expectations for the period.

The Swedish fast fashion chain, which includes fascias Cos and & Other Stories as well as the H&M name, grew pre-tax profits to SEK3.5bn (£326m) in the three months to February 28, with group sales rising 13% to SEK32.2bn (£3.23bn), or up 12% in local currencies.

But this came below analysts’ forecast of profits at around SEK3.8bn (£355m).

Chief executive Karl-Johan Perrson highlighted the “challenging macroeconomic situation” in many territories H&M operates in, although said sales had “got off to a good start”.

He noted that investments into IT and online had dampened operating profit, which increased by 9% to SEK3.4bn (£316m).

“If we disregard cost increases for the long-term investments, operating profit would have increased by 14% compared to the corresponding quarter last year,” he explained.

Perrson added: “We are continuing to work intensively on the global roll-out of our online store to new countries. Spain and Italy will become new H&M online markets in early autumn. In addition, preparations are under way for the opening of our online shop in China at the end of the year.”

In 2014 the group plans to open 375 new stores, including ones in Melbourne, Milan, Shanghai and Munich, as well as a further two new flagship stores in Manhattan – on Fifth Avenue and Herald Square.

“We have a strong customer offering with many great collections and we are constantly working to further develop and broaden our product range,” said Perrson.

“One example of this is our extended H&M Sport range, which has been very well received by customers and will be launched in even more countries. Furthermore, we are continuing our focus on sustainability so that H&M is the more sustainable option for our customers. The fact that we have just been named by Ethisphere Institute as one of the world’s most ethical companies provides proof of our sound sustainability work.”

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