Unexpected Rise in Q4 helps H&M to Set New Growth Target

Unexpected Rise in Q4 helps H&M to Set New Growth Target

Swedish fashion retailer H&M dropped on Tuesday, a growth target in favour of a turnover target to reflect growing online sales. It reported a small increase in pretax profit for the September-November period.

Pretax profit in H&M’s fiscal fourth quarter unexpectedly rose following five consecutive quarters of falling profits, to 7.4 billion crowns ($839 million) from a year-ago 7.2 billion. Analysts polled by Reuters had on average forecast a 2 percent drop to 7.0 billion.

H&M has struggled with increasing competition in the budget segment  and set a new target to increase local-currency sales by 10 to 15 percent annually while investments in IT and new concepts, as well as large markdowns, have dented margins and profits.

“Mark-downs increased during the year due to a lower sales increase than planned. In addition, the strong US dollar made the group’s purchases more expensive. However, in the fourth quarter earnings improved,” H&M executive said.

H&M said it would open 430 new stores this year, a plan at the bottom of the range of its earlier expansion target of 10-15 percent new stores annually. It said it would roll out e-commerce in Turkey, Taiwan, Hong Kong, Macau, Singapore and Malaysia, taking its online markets to 41.

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