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H&M reports 10% sales increase in Q1

Tom Bottomley
29 March 2019

Swedish fashion retailer H&M has reported a sales increase of 10% year on year to SEK 51.01bn (£4.2bn) in the first quarter from 1 December 2018 to 28 February 2019, up from SEK 46.2bn (£3.8bn).

Gross margin has also increased to 50%, from 49.9% a year ago in the first quarter.

The retailer’s pre-tax profit fell for the seventh straight quarter in December-February, to SEK 1.04bn (£85m), down from SEK 1.26bn (£104m) last year.Pre-tax profits were impacted by the decision to replace the existing online platform in Germany.

The news is positive as the fall in profits is much less than expected and the shares rose 13%. There was an improvement in margins as a result of a stronger customer offering combined with ongoing improvements in buying and logistics.

H&M CEO, Karl-Johan Persson, commented: “Our ongoing transformation work has contributed to stronger collections with increased full-price sales, lower markdowns and increased market shares.

“Sales developed well both in stores and online in many markets, including Sweden which grew by 11%, the UK by 8%, Poland by 15%, China by 16% and India by 42% in local currencies.”

India is seen as a key strategic growth area for the retailer. H&M India has just signed a deal to sell H&M on e-commerce platforms Myntra and Jabong. Persson added: “India is a growth market with large potential and we look forward to making our brand available to new customers across the country. Myntra and Jabong will be an important complement to H&M’s existing physical and digital stores in India.”

In 2019 the H&M group plans a net addition of 175 new stores. Most of the new H&M stores will open in growth markets, while the number of H&M stores in Europe is expected to reduce by 50.

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