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H&M struggles with profitability.

 H&M blamed high clothes prices, its exit from Rus­sia and a cost-cut­ting pro­gramme for an unex­pec­tedly large col­lapse in its earn­ings as the world’s second-largest fash­ion retailer’s struggles with prof­it­ab­il­ity con­tinue. Oper­at­ing

Clothes

profit plunged 87 per cent to SKr820mn in the fourth quarter to the end of Novem­ber from a year earlier. Shares in H&M fell more than 4 per cent to SKr125.80 yes­ter­day, hav­ing lost nearly half of their value since their recent peak in April 2021. The Swedish retailer, which lags behind Indi­tex, the Span­ish owner of Zara, in sales and prof­it­ab­il­ity, launched a SKr2bn cost-cut­ting pro­gramme last year that included 1,500 job losses.


H&M’s sales in the fourth quarter were up 10 per cent to SKr64.4bn but flat in local cur­rency terms. It said sales from Decem­ber 1 to Janu­ary 25 had increased 5 per cent in local cur­ren­cies. «Sales in the new fin­an­cial year have star­ted well,» said Helmersson. She hoped that sales, prof­it­ab­il­ity and invent­ory levels would rise this year.

She reit­er­ated H&M’s goal for next year of a double-digit oper­at­ing profit mar­gin, from 3.2 per cent in 2022. Its oper­at­ing mar­gin was more than 20 per cent in 2010 but has been about half of Indi­tex’s for the past four years. The Swedish retailer has struggled to match Indi­tex’s man­u­fac­tur­ing flex­ib­il­ity and has often ended up with large amounts of gar­ments that it has had to dis­count. The retailer said it expec­ted to have lower invent­ory in 2023 but avoided giv­ing pre­cise fin­an­cial guid­ance for this year.

It added that cap­ital expendit­ure would increase 50 per cent to SKr10bn. Sep­ar­ately, shares in UK retailer Super­dry fell more than 17 per cent yes­ter­day after it warned on profits. Group rev­enue was up 3.6 per cent to £287.2mn as people flocked back to high streets, the com­pany added.

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Comments

  1. Anita28 January 2023 at 12:30

    H&M seems to be having some serious leadership problems. I think it's time they bring in some new people at the top, with new ideas.

    ReplyDelete
    Replies
    1. Gracie28 January 2023 at 13:29

      Agreed. They've been stagnating for quite some time now. New people need to take the helm and try something different.

      Delete

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