PARIS — Hennes & Mauritz AB, the world’s third-largest fashion retailer, generated a 22.6 percent increase in third-quarter profits, but its shares fell 6.5 percent Wednesday as investors focused on a slight downturn in margins and scaled-back store opening plans.
During the three months ended Aug. 31, net income rose to 4.24 billion Swedish kronor, or $565 million, while sales advanced to 26.89 billion kronor, or $3.58 billion, from 23.54 billion kronor, or $3.13 billion, during the 2009 period. Sales rose 21 percent when measured in local currencies and were up 11 percent on a same-store basis.
Dollar amounts are calculated at average exchange rates for the period in question.
Gross margin receded to 60.5 percent of sales, down from 61.6 percent a year ago. On the company conference call Wednesday morning, Karl-Johan Persson, chief executive officer, emphasized the reduction reflected a 160-basis-point benefit attributable to currency-hedging activities in the third quarter of last year.
“We really would like to clarify that the gross margin is not the goal in itself and has never been,” Persson said, later adding that markdowns as a percentage of sales were flat year-over-year.
Margins were aided by the exchange rate of the U.S. dollar, excess production capacity and lower costs for transportation and raw materials. “The positive effect of these external factors have, however, gradually diminished,” Nils Vinge, head of investor relations, told analysts.
The retailer, which recently revealed it was collaborating with Lanvin designer Alber Elbaz on a collection to be launched in November, said its fall collections had been well received, with sales in the first 27 days of September up 15 percent year-over-year in local currency terms. Sales in August rose 24 percent in local currencies and 14 percent on a same-store basis.
H&M also reported the launch of online sales in the United Kingdom in September had been a success.
However, it warned that it would miss its target of 240 store openings worldwide in 2010 because the completion of some shopping malls, mainly in Southern Europe, has been halted as a consequence of the weak economy. The company expects to open 20 fewer stores as a result.
In the current fourth quarter, 140 store openings are planned as well as 10 closures. At the end of the third quarter, there were 2,078 stores in operation, including 43 under franchise arrangements.
Despite the rollback in expansion plans, Vinge said the company’s annual target of 10 to 15 percent expansion in its store base “remains intact.”
In trading on the Stockholm Stock Exchange Wednesday, shares of H&M closed at 242.30 kronor, or $35.52, down 16.70 kronor, or $2.45, a 6.5 percent pullback for the day generally attributed to lower-than-expected earnings and margins.
@chanel and @pharrell dropped what’s being dubbed as the world’s most exclusive sneakers yesterday. The Adidas Originals NMD Hu, which Williams designed in collaboration with Chanel and @adidasoriginals, has a waiting list of over 120K people who pre-registered online at chanelatcolette.fr –– and only 500 pairs are on sale. The singer predicted the resale value of the shoes could reach $40K. Read the full interview on WWD.com. Link in bio. #wwdfashion (📷: Dominique Maître)
@imanshumpert is diving deeper into his creative endeavors and relaunching his clothing line, Post 90s, and is helping to raise money for the hurricane victims in St. Maarten with a jersey he’s designed with his brother. The Cleveland Cavaliers player talked to WWD about kneeling during the national anthem, working with fashion brands and how he wants to be more than an @nba player. Read the interview on WWD.com #wwdfashion (📷: George Chinese)
Not only does #TheProfit return to CNBC tonight, but @marcuslemonis has launched @shopmarcus, a new shopping and lifestyle retail experience in Aspen and Chicago, with more locations to come. The retail stores offer in-store stylists and a variety of contemporary womenswear selections.
“It’s life, I’m going to face it,” @mingxi11 sighed. “I fell, but you know, I think the most important thing is that I get back up. I had the love, the help from my sister — the girl next to me Gizele [Oliveira] — she’s so nice. When I went backstage everybody was trying to comfort me like ‘Oh Ming, it’s OK.’ I’m really, really touched. I think it’s them who gave me the courage to go back on stage for the finale,” Xi told WWD of her fall at the @victoriassecret fashion show. (📷: David Fisher) #wwdfashion #vsfashionshow #victoriassecret
@louisvuitton tapped @therealpeterlindbergh for its latest city-centric photo book, which is part of a series called Fashion Eye. The primarily black and white book captures the spirit of Berlin in 57 images shot between 1989 and 2019. “Berlin is an inspiration for me, more than a city. I mean @millajovovich is simply Berlin!” said Lindbergh. #wwdfashion
“You know, I think audiences expect a certain performance so I have to deliver to them what they’re expecting to a certain degree. But I’m also a different actor and a different person, I have my own spin on the character,” says @noahegalvin of his takeover of the leading role in “Dear Evan Hansen” following the departure of @bensplatt, who originated the role. Read WWD’s interview with the 23-year-old actor on WWD.com #wwdeye (📷: @jilliansollazzo)
For pre-fall 2018, @etro created richly-colored wonderland, using tapestries, textiles and wallpapers from the Eastern world at large. The line featured floral and graphic prints and jacquard motifs, like this two-piece look featured here. #wwdfashion (📷: Giovanna Pavesi)
@kith is moving into children’s. The men’s and women’s streetwear brand has launched Kidset, a Kith kids line located in New York at 64 Bleecker Street. The line includes mini versions of staple Kith pieces like the Astor bomber jacket and the Kith box logo sweatshirts, along with a wall that can display up to 120 pairs of shoes from @adidas, @newbalance, @timberland and more. #wwdfashion
“I just wanted to create this fully rounded character, but I do think what excited me most was just the opportunity to give a group of people representation that I feel needs it. I like to do characters in projects that stand for something and Karolina definitely does, so that was really exciting to me,” @ginnygardner says of her new role in @hulu’s “The Runaways.” Gardner plays Karolina Dean, a queer superhero, which is a rarity for @marvel. Read more about Gardner’s character on WWD.com #wwdeye (📷: @dandoperalski)