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H&M sees positive results of strategy shift, sales rise 11 percent

By Prachi Singh

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Management

Hennes & Mauritz AB (H&M), for its second quarter, said that the group’s net sales increased by 11 percent to 57.5 billion Swedish krona (6.2 billion dollars), while in local currencies, net sales increased by 6 percent compared with the corresponding quarter last year. Gross profit amounted to 31.5 billion Swedish krona (3.4 billion dollars), corresponding to a gross margin of 55.4 percent compared to 56.1 percent. Profit after financial items amounted to 5.9 billion Swedish krona (0.6 billion dollars) and the group’s profit after tax amounted to 4.5 billion Swedish krona (0.5 billion dollars), corresponding to 2.76 Swedish krona per share.

Commenting on the company’s trading performance, by Karl-Johan Persson, H&M CEO said in a statement: “The H&M group continues to increase full-price sales, reduce markdowns and increase market share, showing that customers appreciate our collections and the improvements we are making to the product assortment and the customer experience. We had strongest growth in countries such as the US where we grew sales by 17 percent, in Mexico by 25 percent, in India by 39 percent, in Russia by 19 percent and in Poland by 11 percent in local currencies. We also grew in the UK and Sweden where we took market share despite challenging market conditions.”

H&M’s H1 net sales improve by 11 percent

In the first half-year to May 31, 2019, the company reported 11 percent increase in net sales to 108.5 billion Swedish krona (11.7 billion dollars), while in local currencies, net sales increased by 5 percent. The company said, ongoing transformation work has contributed to continued positive sales development with more full-price sales, lower markdowns and increased market share. Profit after financial items amounted to 6.9 billion Swedish krona (0.7 billion dollars) and the group’s profit after tax amounted to 5.4 billion Swedish krona (0.5 billion dollars), corresponding to 3.25 Swedish krona per share.

The company added that net sales in the month of June is estimated to increase by 12 percent in local currencies compared with the corresponding month the previous year. The company assesses that the costs of markdowns in relation to sales will decrease by around 1.5 percentage points in Q3 2019 compared with Q3 2018. This would be the fourth successive quarter with a reduction in markdowns. The company expects net addition of new stores for full-year 2019 will be around 130, which is 45 fewer than previously communicated.

In April H&M opened online in Mexico, and this autumn the company will launch online via franchise in Thailand, Indonesia and Egypt and on ecommerce platform Myntra in India, while in China & Other Stories will open on Tmall.

Picture credit:H&M media gallery

H&M