STOCKHOLM-Sweden’s Hennes & Mauritz AB-the world’s second biggest clothing retailer-continues to bet top dollar in China with plans to open most of its new stores there this year, despite widespread concern over the slowing growth in the Asian country’s economy and after mildly disappointing third quarter results.
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“As far as the overall Chinese market goes in the third quarter we have heard that there has been a slight slowdown from very a strong sales pace increase to somewhat calmer levels”, Chief Executive Karl-Johan Persson said.
H&M may still be growing sales, but it seems it’s not enough for investors, with the fashion group’s share price dropping 2.3 per cent at pixel time.
Inditex reported a gross margin of 58.1 per cent for the February to July period.
H&M said pretax profit was largely unchanged at 6.94 billion crowns ($826 million) in the June to August period from a year earlier compared to a mean forecast in a Reuters poll of analysts for 6.93 billion. When the weather became more normal in September, sales took off again and we are looking forward to an exciting fashion autumn.
She said the shares are likely to perform in line with the market as they underperformed last month.
Consultants say H&M has found its niche in China, with had grown quickly into the fifth largest market for the retailer behind Germany, the United States, the United Kingdom and France, due to rivals in China having yet to master the retail cycle that is fast rolling from the design to the production.
H&M is also working on sustainability work and said more of its suppliers are beginning to pay the Fair Living Wage. In the upcoming months, it also wants to break through online in Switzerland and Russian Federation, with New Zealand, Cyprus and Puerto Rico up next year.
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The company plans to open 400 new stores in 2015.
