H&M NET FALLS 16%
Byline: Robert Murphy
PARIS — Disposable chic has its price.
Pressed by expansion costs and an apparent dearth of reliable basics, Stockholm-based fashion retailer Hennes & Mauritz AB Thursday said its full-year profits fell 16 percent to $268.6 million, or 32 cents per share, from $323.6 million, or 39 cents a share, a year earlier.
Revenues for the 12 months ended Nov. 30 climbed 9 percent to $3.7 billion from $3.4 billion. All figures are converted from the Swedish krona at current exchange.
H&M chief financial officer Carl-Henric Enhorning attributed the decline to “discounting problems this year stemming in the spring and summer from too many trendy fashion garments and not enough basics, and in the autumn and winter to unusually warm weather, which resulted in low sales of warm garments.”
According to Enhorning, earnings also suffered because of a decline in the value of the Swedish krona against other European currencies, as well as investment in new stores — especially in Spain and the U.S., where H&M opened seven and 10 units, respectively, last year.
Over the last year, H&M, which is known for trendy fashion at low prices, opened 90 stores and shuttered 21 units, mostly in Sweden. The firm now operates 682 stores, with 85 percent of sales last year generated outside of Sweden.
This year, H&M plans to open roughly 100 new stores, primarily in Germany, the U.K., France and Spain. Enhorning said the company plans to open 20 units in the U.S. this year.
Enhorning said U.S. sales accounted for $84.2 million, or just over 2 percent, of revenues last year. “It has been a good start in the U.S.,” he said. “It is a market that we will continue to develop.” He added that by 2003, H&M plans to operate 85 stores in the Northeastern portion of the U.S.
Looking ahead, Enhorning said that the firm is looking forward to a strong year: “We feel positive moving into 2001 and we have solved the problem of mixing our merchandise between more fashion-driven and basic garments.”
H&M stock gained 13 percent in trading on the Stockholm Stock Exchange Thursday to close at $20.21.