PARIS – Hennes & Mauritz AB stated web revenue halved within the first quarter as its gross margin got here underneath stress from markdowns, ongoing investments and a powerful Swedish krona.
Internet earnings within the three months ended Feb. 28 totaled 579 million Swedish kronor, or $57.7 million, down 53 p.c from 1.23 billion kronor throughout the identical interval a yr earlier. This was sharply beneath a consensus forecast of 1.28 billion kronor, in response to a FactSet ballot of analysts.
H&M’s gross margin, a key indicator of profitability, narrowed to 49.1 p.c from 51.5 p.c.
The high-street retailer posted a 3 p.c enhance in first-quarter gross sales to 55.33 billion kronor, or $5.47 billion, within the Dec. 1 to Feb. 28 interval. In native forex phrases, gross sales had been up 2 p.c within the quarter, with round 3 p.c fewer shops in contrast with the earlier yr, it stated Wednesday.
The group expects gross sales in March to rise 1 p.c in native forex phrases.
“Though we’ve made vital progress in our plan and have good value management, our gross sales and earnings within the quarter had been considerably weaker than deliberate – however the first quarter is the smallest quarter of the yr for us by way of gross sales and margin, and we’re assured going ahead,” chief govt officer Daniel Ervér stated in an announcement.
“Profitability within the quarter was negatively impacted by a weaker gross margin, which in flip was affected by unfavorable exterior components, elevated markdowns and investments within the buyer providing,” he added.
“We estimate that the general unfavorable impact of those will already be considerably smaller within the second quarter than within the first quarter,” Ervér stated.
He reported constructive gross sales tendencies in western, southern and jap Europe, notably Germany and Poland. On-line gross sales additionally progressed because the quick vogue large rolled out its upgraded e-commerce platform to extra markets.
In the meantime, H&M continued to shut underperforming shops, shuttering 40 places through the interval.
“Our major priorities are a strengthened product providing, a extra inspiring buying expertise and a stronger model. Via this we create the circumstances for long-term, worthwhile and sustainable development”, Ervér stated.
