STOCKHOLM — As it seeks to respond to growing pressure from online pure players, Hennes & Mauritz AB said on Wednesday it expects online sales for the group to increase by around 20 percent per year in the next five years.
Releasing for the first time figure detailing its revenues from e-commerce and new businesses, the Swedish fast-fashion giant forecast online sales will total 75 billion Swedish krona, or $9.37 billion at current exchange rates, by 2022, versus 29 billion krona in the 2016-2017 financial year.
Ahead of a Capital Markets Day in Stockholm, H&M said e-commerce is “growing well” and represented 12.5 percent of its total revenues last year.
The group’s online channel is showing “good profitability” and accounted for 22 percent of the group’s operating profit, it added. Digital investments represented 45 percent of its total capital expenditures.
The company last month reported a 13 percent drop in full-year profit and said it does not expect to meet its growth target of increasing sales in local currencies by 10 percent to 15 percent in the current financial year due to the struggles it faces in its physical stores.
H&M is due to detail its new initiatives to investors at the meeting in Stockholm, which will feature officials including chief executive officer Karl-Johan Persson.
“In view of the ongoing shift in the industry and the H&M group’s ongoing transition work, 2018 is expected to remain challenging. H&M’s sales in comparable stores are expected to remain negative with a gradual improvement during the year,” it said in a statement.
As its transition work takes effect, physical stores are expected to return to comparable positive sales development from 2019 onward, with considerably lower price markdowns compared with 2017.
“Overall, this is expected to lead to good increases in profit,” H&M said.
New business — which encompasses brands such as COS, Cheap Monday, Monki, & Other Stories and Arket — accounted for 7 percent of the group’s total sales last year.
Sales for this division are expected to increase by at least 25 percent per year to reach more than 50 billion Swedish krona in 2022.