In a swift move, Swedish fashion retailer H&M dropped on Tuesday a decades-old store growth target in favour of a turnover one to reflect growing online sales. This after it reported a minimal increase in pre-tax profit for the September-November period.
Unexpectedly, the pre-tax profit in H&M's fiscal fourth quarter rose following five consecutive quarters of dwindling profits to 7.4 billion crowns ($839 million) from a year-ago 7.2 billion. Analysts had on an average forecast a 2 per cent fall to 7.0 billion.
H&M said its new target is to increase local-currency sales by 10 to 15 per cent annually with continued high profitability. Here it must be mentioned that the retailer has struggled with increasing competition in the budget segment while investments in IT and new concepts as well as large markdowns have dented margins and profits.
H&M, that had earlier unveiled a weaker than-expected turnover for the fiscal quarter as well as for December reported that sales in January 1to 29 were up 11 per cent in local currencies. The company said that it would open 430 new stores this year, a plan at the bottom of the range of its earlier expansion target of 10-15 per cent new stores annually. It said it would roll out e-commerce in Turkey, Taiwan, Hong Kong, Macau, Singapore and Malaysia, taking its online markets to 41.