PARIS – Hennes & Mauritz AB mentioned internet revenue halved within the first quarter as its gross margin got here beneath stress from markdowns, ongoing investments and a powerful Swedish krona.
Web earnings within the three months ended Feb. 28 totaled 579 million Swedish kronor, or $57.7 million, down 53 p.c from 1.23 billion kronor throughout the identical interval a 12 months earlier. This was sharply under a consensus forecast of 1.28 billion kronor, based on a FactSet ballot of analysts.
H&M’s gross margin, a key indicator of profitability, narrowed to 49.1 p.c from 51.5 p.c.
The high-street retailer posted a 3 p.c enhance in first-quarter gross sales to 55.33 billion kronor, or $5.47 billion, within the Dec. 1 to Feb. 28 interval. In native foreign money phrases, gross sales had been up 2 p.c within the quarter, with round 3 p.c fewer shops in contrast with the earlier 12 months, it mentioned Wednesday.
The group expects gross sales in March to rise 1 p.c in native foreign money phrases.
“Though we’ve made essential progress in our plan and have good price management, our gross sales and earnings within the quarter had been considerably weaker than deliberate – however the first quarter is the smallest quarter of the 12 months for us by way of gross sales and margin, and we’re assured going ahead,” chief govt officer Daniel Ervér mentioned in an announcement.
“Profitability within the quarter was negatively impacted by a weaker gross margin, which in flip was affected by destructive exterior elements, elevated markdowns and investments within the buyer providing,” he added.
“We estimate that the general destructive impact of those will already be considerably smaller within the second quarter than within the first quarter,” Ervér mentioned.
He reported constructive gross sales traits in western, southern and japanese Europe, notably Germany and Poland. On-line gross sales additionally progressed because the quick style big rolled out its upgraded e-commerce platform to extra markets.
In the meantime, H&M continued to shut underperforming shops, shuttering 40 areas in the course of the interval.
“Our predominant priorities are a strengthened product providing, a extra inspiring buying expertise and a stronger model. By means of this we create the situations for long-term, worthwhile and sustainable development”, Ervér mentioned.
