H&M profits dip 29 per cent despite sales rise

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H&M has hailed solid sales growth as its investment in its online offering begins to pay off, despite its profits taking a beating.

In the nine months to August 31 the Swedish fashion giant posted a sales boost of three per cent to SEK178.1 billion (£15.3 billion), aided by nine per cent sales growth in its third quarter to SEK64.8 billion (£5.6 billion).

The retailer said it was in a “transitional period” having invested heavily in its online arm to offset falling high street sales, bearing fruit in its third quarter seeing online sales jump 32 per cent.

Profits were no so strong however, as H&M struggled with the implementation of a new logistics system across its key markets in Europe and the US.

During the nine month period profits before financial items dropped 29 per cent to SEK11.3 million (£975,550), and 20 per cent in its third quarter to SEK4 million (£345,200) thanks to a SEK400 million (£34.5 million) bill due to the implementation issues and subsequent drop in sales.

“The rapid changes in the fashion industry are continuing and the H&M group is in an exciting transitional period,” chief executive Karl-Johan Persson said.

“Our transformation work has contributed to a gradual improvement in sales development with increased market share in most markets during the third quarter.

“We are getting a positive response from customers to the changes that we are making both online and in stores — including in those H&M stores, where we are trying out various adjustments to our assortment, product display and shop fittings. We are therefore now scaling up this to more stores and markets.”

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