PARIS — Despite disappointing third-quarter results, fashion behemoth Hennes & Mauritz AB is ramping up store expansion and writing a new chapter with & Other Stories, its new brand set to launch next year.
On Thursday, the Swedish retailer said it would launch the concept, aimed at fashion-conscious women with a “personal look,” with eight to 10 stores in Europe’s style capitals.
“We’re focusing on the whole look. [For] women creating their look, the shoes, the bag and the necklace are just as important as the ready-to-wear,” Samuel Fernström, head of & Other Stories, said in an exclusive interview with WWD.
The stores, which will average 7,500 square feet in size, are to offer a wide range of categories and prices, including a large shoe and handbag offer, jewelry, accessories, cosmetics, lingerie and rtw, with “quality” and “attention to detail” being key, according to Fernström.
“We have different design teams focusing on different parts of the collection,” he said. The creative department for & Other Stories is based largely in Paris, and is led by head of design Anna Teurnell, although a second, smaller team is based in Stockholm. RELATED STORY: H&M to Open Largest Store Globally in U.S. >>
“Paris brings a tomboy look with poetic hints — tough yet feminine designs, while our atelier in Stockholm is responsible for a minimalistic touch, some raw edges, sensuality and sharp tailoring,” Teurnell explained.
Prices for & Other Stories “will start where H&M stops,” the company’s head of investor relations Nils Vinge said during a conference call Thursday.
They will nevertheless show a wider spread than H&M’s high-end concept COS, starting at 7 euros, or $9 at current exchange, for certain cosmetics, jewelry and footwear items, and 15 euros, or $19, for rtw. The most expensive products will cost around 195 euros, or $251, for shoes or handbags and 245 euros, or $315, for a leather jacket, for example.
Besides the new concept, H&M said it was ramping up expansion of existing banners for the current fiscal year to 300 stores, up from the 275 previously announced, with a focus on China and the U.S. Plans for 2013 call for the first H&M store in South America, in Santiago, Chile, and 10 to 15 percent net store growth worldwide.
The group has also pushed back the introduction of its U.S. e-commerce site for the third time. Instead of going live this fall, the launch is now scheduled for summer 2013.
H&M said this move was a result of its increasing focus on other online markets, meaning it needs more time for the U.S. portal. “It’s what’s best for H&M in total, and for the long term,” said Vinge, who would not be drawn on Web store rollout plans for specific countries. The retailer currently offers e-commerce in eight markets, in which it plans to launch a mobile store for smartphones and tablets next spring.
As of Aug. 31, the company operated 2,629 stores, of which 2,494 were under its core concept, while 55 were COS units, 55 Monki branches, 21 Weekday banners and four Cheap Monday stores.
H&M’s expansion comes at a cost. Increased investments, on top of unseasonal weather, currency effects and cost inflation, dampened the group’s third-quarter figures. Profits rose only 0.9 percent after financial items to 4.9 billion Swedish kroner, or $586.5 million.
The retailer noted that strong appreciation of the Swedish kroner against the euro led to a 200 million kroner, or $23 million, negative impact for the period.
All dollar rates are calculated at average exchange rates for the period concerned.
The results were 11.4 percent below consensus estimates, analysts Jamie Merriman, Anthony Sleeman and Richard Wielechowski from Bernstein Research noted.
Gross profit was 16.77 billion kroner, or $2.01 billion, up 16.7 percent compared to the prior-year period. Gross margin fell to 58.2 percent, from 58.6 percent, notably due to increased investments.
“Investments made up a larger proportion of sales than in the second quarter,” Vinge said.
“Cost inflation, primarily in Asia, and the strength of the U.S. dollar, plus a stepped-up investment in long-term initiatives…more than offset the benefit of easing cotton prices,” Bernstein’s analysts noted.
The firm cited improved sales in the Sept. 1 to 25 period, increasing 14 percent in local currency terms, following a 4 percent decrease in August.
H&M confirmed previously reported sales figures for the third quarter, from June 1 to Aug. 31, of 33.6 billion Swedish kroner, or $4.9 billion, a 10 percent increase in local currency terms and flat in comparable units compared with the prior-year period. Revenues grew 25 percent in the U.S., 50 percent in Russia and 7 percent in the U.K. in local currencies.
Shares in H&M closed down 5.8 percent to 232.20 Swedish kroner, or $35.22, on the Stockholm Stock Exchange as markets reacted to the worse-than-expected results.
“My personal philosophy to beauty is paying attention to oneself. I love to be outdoors, lots of fresh air, trying to take care of yourself as best you can. I always notice that comes through,” says Felicity Jones, the global face of @shiseido-owned @cledepeaubeauteus, which launches today. Head to WWD.com to read more about the actress’ love for beauty and how she prepared for her new role in “The Basis of Sex,” playing the young Ruth Bader Ginsburg. #wwdbeauty (📷: @dandoperalski)
For men’s fall 2018, @giuseppezanotti drew on elements from streetwear, sport, biker, combat and rock ‘n’ roll. Pictured here are a pair of shoes from the collection, featuring zippers, rhinestones, and silver hardware. Head to WWD.com to see a roundup of the accessories from Milan’s men’s fall 2018 shows. #wwdfashion (📷: Andrea Delb)
To celebrate the 25th anniversary of @ralphlauren’s snowboarding collection, the brand is mining its archives. The iconic brand is reintroducing vintage styles and dropping new designs for a color capsule that will be available in Ralph Lauren stores and @openingceremony on January 25. The capsule will consist of 10 pieces, including the Snow Beach Pullover, pictured here, which is a collector’s item that rapper Raekwon wore in Wu-Tang Clan’s “Can It Be All So Simple” video. #wwdfashion (📷: Tom Gould)
For @rochasofficial’s pre-fall 2018 collection, creative director Alessandro Dell’Acqua channeled the sophisticated and intriguing Catherine Denevue in the film “Belle de Jour.” Polished collarless coats, midi skirts, suits and ’60s graphic motifs were all featured in the collection, adding a sense of discreet luxury. See the rest of the photos on WWD.com #wwdfashion
“We tried to produce clothing of that couture quality, but the most daunting part was that we only had a matter of days [to do it],” said costume designer Lou Eyrich, who recreated Gianni Versace’s iconic looks for @americancrimestoryfx. Eyrich searched online retailers and vintage shops for original pieces from the design house and for @penelopecruzoficial, who plays Donatella Versace. Head to WWD.com to read how she created the Versace world. #wwdfashion
Only three months after her stellar debut catwalk season, @kaiagerber has inked her first big design collaboration –– with @karllagerfeld. The collection blends Lagerfeld’s Parisian chic aesthetic and the model’s signature West Coast casual style via RTW, accessories, footwear and more. The #KarlLagerfeldxKaia collection will launch in September with a series of events. Get all the details on WWD.com. #wwdnews #wwdfashion
Harrods plans to remove the famous statue of Princess Diana and Dodi Al Fayed from the bottom of the Egyptian escalators and hand it back to Mohamed Al-Fayed. “We are very proud to have played our role in celebrating the lives of Diana, Princess of Wales and Dodi Al Fayed at Harrods and to have welcomed people from around the world to visit the memorial for the past 20 years,” said Michael Ward, Harrods managing director. “With the announcement of the new official memorial statue to Diana, Princess of Wales at Kensington Palace, we feel that the time is right to return this memorial to Mr. Al Fayed and for the public to be invited to pay their respects at the palace.” More on the news, with reporting by @loreleimarfil, at WWD.com. #wwdnews