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H&M profits fall amid investment


Fashion retailer H&M has seen net profit fall as a result of “long-term investments” as it continues to broaden its product range, results released today reveal.

Group profit after tax stood at 5.3 billion Kronor (£528 million) in its fourth quarter as group sales including VAT rose nine per cent in local currencies, though the retailer noted that profit was affected by heavy investment in expansion.

For its full year, the Swedish retailer saw profit jump seven per cent year-on-year to 16.9 billion Kronor while group sales including VAT rose 11 per cent between December 1st 2011 and November 30th 2012.

Earlier this month, H&M opened new stores across Europe under its & Other Stories brand, with a total of seven stores set to open in the coming months as the retailer seeks to entice shoppers looking for luxurious items at a reasonable price.

Commenting on the results, H&M CEO Karl-Johan Persson said: “Our long-term investments relate to a number of areas such as online shopping, IT, a completely new brand & Other Stories and future broadening of the product range.

“These long-term investments have created cost increases and to a great extent have not yet generated any revenue.

“However, we consider these investments to be both necessary and wise as they aim to secure future expansion and profits and thereby further strengthen H&M’s position.”

Over the course of 2012, H&M opened 304 new stores and entered five new markets, creating around 10,000 jobs and the retailer said that further expansion is planned for the year ahead.

Planning 325 new net stores in 2013, H&M explained that its highest expansion rate will again be in China and the US, while it will open its first stores in Chile, Estonia, Lithuania, Serbia and Indonesia.

Sustainability is also becoming a growing focus for the retailer, which last week unveiled singer and actress Vanessa Paradis as the face of its sustainable brand Conscious and Persson explained that the issue will remain high on the agenda in the year ahead.

“Sustainability is becoming increasingly important and one element of our strong offering is also that our increasingly aware customers see H&M as the more sustainable option.

“Sustainability is therefore high on our agenda; it is an integral part of our operations and has been so for some time.

“We are looking forward to an exciting 2013 full of opportunities. We have the greatest respect for the macro-economic climate and how it may affect the consumption in many of our markets, but we have a strong belief in our offering and are convinced that H&M will continue to maintain its strong position.”

Published on Wednesday 30 January by Editorial Assistant

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