Negative currency effects caused by a strong Swedish kroner and cost pressures such as higher cotton prices, affected profits for fashion retailer H&M during its first quarter, according to a statement released today.
The three months to February 28th 2011 saw sales reach SEK 24.5 billion (£2.41 billion), representing a drop of one per cent on Q1 2010’s figure of SEK 24.85 billion million, while profit after financial items dropped from SEK 5.05 billion to SEK 3.53 billion.
Group profit after tax stood at SEK 2.62 billion compared to SEK 3.74 billion last year, corresponding to SEK 1.58 per share.
In local currencies, however, sales excluding VAT were up nine per cent year-on-year.
CEO of H&M Karl-Johan Persson said that the clothing retailer had chosen to avoid passing on cost increases to its customers, instead opting to strengthen its price position and maintain its fashion market share.
“We increased sales in local currencies by nine per cent and one per cent in comparable units in a continued tough market,” Persson explained.
“The quarter was also characterised by the fact that many external factors had a negative effect on the results, in contrast to last year when they had a favourable effect in the corresponding quarter.”
Last summer H&M launched a transactional website to cater for an increasing demand from online shoppers, and recent trading figures for the company make encouraging reading.
Sales in the period March 1st to March 29th 2011 are up by three per cent in local currencies, compared to a very strong comparative period in 2010, following a nine per cent year-on-year sales rise in February.