PARIS — Warm autumn weather took a toll on Hennes & Mauritz, as the Swedish fast-fashion giant came in short of analysts' expectations, reporting a 6 percent gain in fourth-quarter profits to 4.29 billion Swedish kronor, or $539 million. Dollar figures are at the average exchange rate.
H&M, Europe's biggest clothing retailer, said Thursday higher marketing costs and a sluggish start to the season drove up operating expenses in the three months through Nov. 30, but the chain's price reductions were stable with last year.
H&M said sales in December gained 14 percent, with a 4 percent like-for-like increase. In the quarter, gross profit was 10.8 billion kronor, or $1.35 billion, as gross margin reached 60 percent, up slightly from 59.9 percent last year. For the full year, revenues rose 14 percent to 61.26 billion kronor, or $8.23 billion. Meanwhile, the chain revealed a new franchise agreement to open stores in Dubai and Kuwait. The first two units are slated for this fall.
In a conference call, Nils Vinge, the firm's manager of investor relations, called the franchise deal region-specific and not part of H&M's overall expansion strategy. "This is a very interesting opportunity to enter a fast-growing region in a controlled way," said Vinge. H&M's partner in the region is Alshaya, which also has similar deals with Next, The Body Shop and Starbucks.
H&M's principal expansion markets next year will be the United States, Canada, Germany, the United Kingdom and Spain, with 150 stores slated to roll out over the next 12 months. Among the openings will be the first H&M store in Los Angeles and in the Canary Islands. Additional stores are expected to bow in and around San Francisco, where H&M opened its first stores this year and where Vinge said the company had its biggest first day of sales at a store ever. In spring 2007, H&M also will move into Slovakia, with a first unit in Bratislava.
H&M finished the year with 1,193 stores, opening 145 units and closing 20. Some analysts have criticized H&M's opening schedule as too conservative compared with its rival Inditex, the Spanish retailer that runs Zara.Inditex said it expected to open 450 new stores over the year. Vinge said the chain planned a "large-scale" expansion of its online and catalogue business as a complement to its existing store network. A first e-commerce site is slated to open in the Netherlands in fall 2006.
Commenting on the Stella McCartney collection for H&M, Vinge said the second of the chain's tie-ins with a well-known designer — the first was with Karl Lagerfeld — had given H&M more "confidence," suggesting additional collaborations would follow.
Full-year sales in the United States increased 18 percent. Vinge said H&M turned a profit in that market last year, and continued to refine its model to bring its profitability ratio in line with markets elsewhere. Other fast-growing markets for the chain included France, where sales gained 18 percent, and Spain, where sales gained 48 percent. Sales grew 10 percent in the U.K., 11 percent in Germany and 5 percent in H&M's home market of Sweden. Overall, H&M operates in 22 countries around the world.
H&M shares gained 1.3 percent in trading Thursday to close at 273 kronor, or $36.06 on the Stockholm exchange.
@fearofgod and @maxfieldla have teamed up on a pop-up installation. The store, located in the gallery space across from Maxfield’s Melrose Ave location, is the site of the brand’s House of God pop-up in which Fear of God founder @jerrylorenzo has created a church-inspired installation. A dozen vintage church pews sit in front of an LED screen playing 90s gospel singers in an effort to re-create an environment akin to a Southern Baptist Church, Lorenzo explained. Read more about the pop-up on WWD.com #wwdfashion (📷: Jennifer Johnson)
Known for his sleek, sophisticated American glamour, Norman Norell is the subject of an upcoming exhibition at @fitnyc. “Norell: Dean of American Fashion,” which runs from February 9 through April 14, will feature approximately 100 ensembles and accessories. His best work is exemplified by the designer’s glittering “mermaid” gowns frosted with thousands of hand-sewn sequins – like the one pictured. (📷: William Helburn) #wwdfashion
For pre-fall 2018, @balmain didn’t let go of the glitz. A crystal embroidered baseball jacket priced at around $40,000 hangs in the “couture” section of the brand’s first men’s pre-collection. Sporting the words “Balmain Army” across the back, the item took around two months to make. “When it was completed, it was like Christmas, it was like, ‘It’s done, it’s exactly what I wanted,’” said Balmain’s creative director @olivier_rousteing during a tour of the collection in a Paris showroom on Monday. #wwdfashion
Eighty degree temperatures and outdoor installations at the annual Art Basel Miami Beach called for bright, elevated beachwear. See more street style pictures on WWD.com. #theyarewearing #ABMB (📷: @lifeinreverie)
Following September’s emotional tribute to her brother Gianni, Donatella Versace wanted to bring the spring show’s deep sense of intimacy to her @versace_official pre-fall collection. Donatella found inspiration in Versace Palazzo in Milan and from Gianni’s opulent apartment. Archival patterns and new motifs were splashed on silk shirtdresses and fitted jersey frocks. See the rest of the photos on WWD.com. #wwdfashion
Demna Gvasalia continues to shake up the Paris fashion calendar — and experiment with new runway timetables for his @vetements_official brand. WWD has learned that Vetements plans to stage its next coed show for the fall 2018 season on January 19 during Men’s Fashion Week in the French capital. Details about the timing and venue have not been confirmed — stay tuned on WWD.com to catch the latest. #wwdnews (📷: @giovanni_giannoni_photo)
@zacposen's go-to holiday gift? Cookies! "I'll usually bake cookies and send them as a gift," said the designer, who recently released his cookbook "Cooking With Zac: Recipes from Rustic to Refined." Get the recipe for his Brown Butter-Chocolate Chip Cookies via link in bio 🍪🍪🍪 #wwdeye #cookingwithzac
For @monsemaison’s pre-fall 2018 collection, Fernando Garcia and Laura Kim honed in on the brand’s many signatures — men’s wear, which was tweaked and feminized through deconstruction, proportion play and lots of bare shoulders. See the rest of the photos on WWD.com #wwdfashion (📷: George Chinese)
On Friday night, @yohjiyamamotoofficial received the Design for Asia Lifetime Achievement Award in Hong Kong. The 75-year-old designer has been celebrated for many years and is best known for his dark and avant-garde tailoring. “In my long career, in design, architecture, [I’ve been to] so many parties, this is the very first time that I have such a warm feeling, I really appreciate this,” Yamamoto said. #wwdfashion (📷: @dominiquemaitre)