H&M continues retail expansion, posts 9 percent rise in Q2 profit

For the second quarter, the H&M group’s sales including VAT increased by 10 percent to 59,538 million Swedish krona (6,983 million dollars). Gross profit for the quarter increased by 9 percent to 29,345 million Swedish krona (3,442 million dollars) corresponding to a gross margin of 57.1 percent against 57.6 percent. For the first half-year from December 1, 2016 to May 31, 2017, the H&M group’s sales including VAT increased by 9 percent to 113,907 million Swedish krona (13,350 million dollars) during the first six months of the financial year.

Commenting on the company’s performance, Karl-Johan Persson, H&M’s CEO said in a statement, “Sales in the second quarter increased by 10 percent including VAT. In local currencies, sales increased by 5 percent. Profit after financial items increased by 10 percent. Sales in the UK, Scandinavia and Eastern Europe as well as in many of our growth markets were good. However, it was more challenging in several of our major markets such as the US, China, the Netherlands and Switzerland. H&M’s online sales developed very well and continued to increase its share of total sales.”

H1 profit up 6 percent

For the six month period, sales excluding VAT amounted to 98,368 million Swedish krona (11,528 million dollars). In local currencies, sales increased by 5 percent. Sales excluding VAT for the second quarter, amounted to 51,383 million Swedish krona (6,022 million dollars). In local currencies, sales increased by 5 percent.

H&M said, profit after financial items increased by 6 percent to 10,920 million Swedish krona (1,279 million dollars) and profit after tax amounted to 8,354 million Swedish krona (979 million dollars), corresponding to 5.05 Swedish krona (0.59 dollars) against 4.77 Swedish krona (0.56 dollar) per share.

Profit after financial items increased by 10 percent to 7,708 million Swedish krona (903 million dollars). The group’s profit after tax amounted to 5,897 million Swedish krona (691 million dollars), corresponding to 3.56 Swedish krona (0.42 dollar) per share.

H&M continues to expand online and offline footprint

The company witnessed continued rapid and profitable growth of the group’s online sales, which in some established markets account for 25 to 30 percent of total sales. The company said, H&M’s online store opened in further six new markets during the spring - Turkey, Taiwan, Hong Kong, Macau, Singapore and Malaysia – and is now available in 41 markets.

The H&M group’s sales including VAT for June 2017 are expected to increase by 7 percent in local currencies compared to the same month last year. The company added that successful store openings in new H&M markets Kazakhstan and Colombia this spring will be followed by openings in Iceland, Vietnam and Georgia and H&M’s online store will open in a further two markets in 2017 - the Philippines and Cyprus.

COS is expected to reach turnover of around 10 billion Swedish krona (1.17 billion dollars) in 2017, with profitability in line with that of the H&M brand. The company’s new brand, Arket will be launched in 2017 with five stores and 18 online markets. It is estimated that the group’s online sales will grow by at least 25 percent per year going forward. India will be a new H&M online market in 2018 and new H&M store markets planned for 2018 are Uruguay and Ukraine.

For full-year 2017, H&M said, approximately 500 new stores are planned to open, with a focus on growth markets. Most of the new stores will be H&M stores, while approximately 70 to 80 stores will consist of the newer brands COS, & Other Stories, Monki, Weekday and ARKET. H&M Home will also continue its rapid expansion, with approximately 60 new H&M Home departments planned for 2017. In parallel with the expansion, as a part of the company’s store portfolio optimisation plan, approximately 100 stores will be closed, giving a net addition of around 400 new stores for full-year 2017.

Picture:H&M website

 

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