Swedish fashion retailer H&M reports Q4 dip

PanARMENIAN.Net - Swedish fashion retailer Hennes & Mauritz Thursday, Jan 26, reported a dip in fourth quarter profit and lower margins, but said it is gaining market share in a challenging retail market by keeping prices low, according to Dow Jones Newswires.

"Despite increased purchasing costs, we chose a strategy of strengthening our customer offering and market position even further relative to competitors," Chief Executive Karl-Johan Persson said. "We are convinced that this will gradually become more evident to customers and will strengthen H&M's already strong market position even further."

H&M, the world's second-largest fashion chain by revenue behind Spain's Inditex SA, said the retail market in 2011 was challenging as cotton prices soared and consumer confidence dwindled and it expects 2012 to remain tough.

Its closely-watched gross margin fell to 61.9% in the fourth quarter from 63.2% a year earlier as costs rose but also due to increased markdown sales, and the company said it expects somewhat higher markdowns in the first quarter compared with last year.

The company reported strong sales development since the end of its fiscal year Nov 30, with total sales in December up 13% in local currencies from a year earlier, and sales in stores open longer than a year up 4%. H&M said January sales to Jan 24 had increased 12% on the year.

The company said the retailer plans to open a further 275 net new stores in the year.

"The countries in which we will open the most stores during the year are China, the U.S. and the UK. Bulgaria, Latvia, Malaysia and Thailand will become new H&M markets," Persson said, adding that H&M will open its first Latin American store in Mexico during the autumn 2012.