Sartorial slip

28 January 2016 By Carol Ryan

The Swedish fast-fashion retailer said discounts on a glut of winter wear would weigh on sales. H&M is a little less efficient than chief rival Inditex, and the strong dollar isn’t helping either. Still, both are in a different league from most peers.

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Clothing retailer Hennes & Mauritz said group sales excluding VAT increased by 19 percent in its full-year report on Jan. 28. In local currencies the increase was 11 percent.

The Swedish company said it expected sales in January, the second month of its fiscal first quarter, to increase 7 percent in local currencies from a year ago, lower than expected according to analysts at Bernstein. It added that an extra Sunday in the month would reduce the comparable growth rate by 2 percentage points.

“Markdowns in relation to sales in the first quarter of 2016 are expected to have a negative effect on the gross margin of 1 to 2 percentage points compared to the same quarter in 2015,” it said in its fiscal fourth-quarter earnings report.

H&M, which has also seen operating profit margins shrink in 2015 from currency impacts and large investments in its e-commerce rollout, reported a quarterly pre-tax profit drop of 8.3 percent, to 7.1 billion crowns ($840 million), compared with a year earlier.

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