PARIS — Hennes & Mauritz AB reported a 20 percent decline in net profit over the third quarter as steep discounts during the period ate into gains.
Profit for the three months ending Aug. 31 came to 3.84 billion Swedish kronor (or $471 million).
The Swedish fast-fashion retailer sought to defend the discount strategy in its earnings release Thursday.
“Through our aggressive summer sale we succeeded in improving the inventory position,” the company noted.
H&M said that online sales developed “very well,” but not enough to offset a decline in footfall in stores in several of its important markets.
This resulted in “total sales development not reaching our targets so far this year,” the company said.
Sales for the period rose 4.6 percent to 51.23 billion kronor, as H&M continued to focus on the digital sphere. Online sales are estimated to grow by at least 25 percent a year, the group said, noting plans are to conduct business online in all of its markets. H&M expanded its online offer to the Philippines and Cyprus this year, and plans to do so in India in 2018.
Fast-fashion rival Zara earlier this month said it plans to launch online sales in India in October, planting its flag in a market that foreign retailers are scrambling to get into despite infrastructure challenges there.