By  on June 22, 2006

PARIS ­— Hennes & Mauritz is moving out of its box once again.

The Swedish fast-fashion giant — which pioneered collaborations with designers Karl Lagerfeld and Stella McCartney — said Wednesday it would introduce a new “niche” format next year. Details were sparse, but the stores will operate under a separate brand name yet to be revealed. Nils Vinge, H&M’s head of investor relations, suggested the new brand would be more expensive and more fashion-forward than H&M’s existing offerings.

Vinge said 10 stores would open next spring to showcase the chain. H&M plans to explain the change to the market in greater detail this August, he added.

H&M, which operated 1,244 stores at the end of May, has thus far been reluctant to tinker with its successful single-brand format. But the retailer faces increasing competition from Inditex, owner of the Zara chain, as well as Bershka, Pull and Bear, and Stradivarius in Spain; Mango; Topshop in the U.K., and, in the U.S., J. Crew and the Gap brands, Gap, Old Navy and Banana Republic. Gap last year introduced Forth & Towne, and J. Crew has revealed plans to add a new, more casual brand called Madewell with its own freestanding stores.

H&M revealed plans for a new format while reporting that a spike in May sales spurred second-quarter profit 8 percent.

Profits for the three months through May 31 rose to 3.92 billion Swedish kronor, or $517.3 million, driven by a 13 percent sales gain in May after disappointing sales in March and April that H&M blamed on bad weather.

Overall, second-quarter sales gained 7 percent to 17.06 billion kronor, or $2.25 billion, and gross margin stood at 59.6 percent. Currency conversions were made at average exchange rates for the period.

In a conference call, Vinge said the “weak” sales meant stock-in-trade was higher and that “price reductions may be higher in the third quarter.”

Though in line with most analysts’ expectations, the results were significantly slower than those of H&M’s main rival, Inditex. Last week, the Spanish retailer, which opened its first store in Shanghai this spring, said sales in the three months through April advanced 20 percent, while its profits jumped 20 percent.

To Read the Full Article
SUBSCRIBE NOW

Tap into our Global Network

Of Industry Leaders and Designers

load comments
blog comments powered by Disqus