H&M sees surprise profit rise
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H&M sees surprise profit rise

Luxury fashion retailer Hennes & Mauritz AB (H&M) surprised investors last Thursday with a 10% jump in profit. The company reported earnings that sent its share price up at the end of the week, and made noises over future growth coming from online channels, which H&M say are becoming more relevant both to itself and the wider fashion market.

H&M’s share price rose last week

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SOURCE: Yahoo Finance

H&M’s CEO, Karl-Johan Persson, said that the fashion retail market was undergoing significant change driven by increasing digitization. He also said that this was an area in which H&M was seeing significant success. He told investors:

“H&M group’s online sales have developed very well and already account for 25% to 30% of total sales in certain established markets. We are expecting our online sales to increase by at least 25% per year, with profitability in line with that of the physical stores.”

The group had 4,498 stores as of May 2017, a 10% rise from the 4,077 stores it had at the same point in 2016. The company expects a net addition of 430 stores over this year.

H&M beat analysts’ expectations on profit, delivering SEK 5.90 billion against predictions of SEK 5.76. It was also up from SEK 5.36 billion in the previous year. This success was pushed by strong sales in the U.K., Scandinavia and Eastern Europe, as well as “many of its growth markets”.

Disclosure

Dominion holds H&M in its Global Trends Luxury Fund.


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