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International Growth Fuels H&M’s Profits

NEW YORK — Hennes & Mauritz continued its rapid growth in the fourth quarter, and plans to extend that streak with the help of new markets, including Chicago this year and Canada in 2004.<br><br>Net income for the quarter ended Nov. 30 shot up...

NEW YORK — Hennes & Mauritz continued its rapid growth in the fourth quarter, and plans to extend that streak with the help of new markets, including Chicago this year and Canada in 2004.

Net income for the quarter ended Nov. 30 shot up 41.3 percent to $269.9 million, or 33 cents a share. This compared with year-ago earnings of $190.9 million, or 23 cents.

Overall sales for the Swedish firm plumped up 12.6 percent to $1.88 billion from $1.67 billion a year ago.

Dollar figures have been converted from krona at the current exchange rate.

On a conference call, a spokesman attributed H&M’s success to “first and foremost, a well-received collection.” Over the past year, the retailer has also focused on optimizing volumes and lead times for each of its merchandise categories. This, said the firm, has resulted in a steadier flow of goods and more new garments in stores as well as lower stock levels. Accordingly, H&M has increased its sales of merchandise at full price and improved its margins.

In Germany, the firm’s largest market, sales were up 5.9 percent during the quarter to $561.8 million. Local currency sales were up a stronger 10 percent. The region added nine doors for a total of 220.

The U.S., H&M’s 10th-largest market, posted $84.8 million in sales, a 23 percent rise. Without currency fluctuations, the firm’s top line in the U.S. jumped 38 percent. On the bottom line, the region was break even, before depreciation, in the fourth quarter. The growing market added eight stores during the quarter for a total of 45.

This year, the firm will open 15 to 20 new stores in the U.S.

“Our strategy is to continue to grow along the cities of Boston, New York, Philadelphia and Washington,” said the spokesman. H&M also plans to establish itself in the urban Chicago area this year.

In total, the firm plans to add 110 stores this year to its base of 844, while seven doors will be closed, mostly due to relocations. While the bulk of the expansion will come in Germany, France, the U.S. and the U.K., H&M will also enter new markets including Poland, the Czech Republic and Portugal. Additionally, leases have been signed for five stores in Toronto, which are slated to open in 2004.

For the full year, H&M’s profits leapt 49 percent to $670 million, or 81 cents a share, from $449.6 million, or 54 cents, during the proceeding year. Sales advanced 14.6 percent to $6.28 billion from $5.48 billion.