September 30, 2020

The profit of H & M falls 22% to 1,220 million euros | Economy

The profit of H & M falls 22% to 1,220 million euros | Economy



The Swedish fashion chain H & M increased its sales by 5% in the year 2018 (ending November 30), to 210,400 million Swedish crowns (20,297.9 million euros), favored by a currency effect without which the increase It would have stayed at 2%. However, the net profit of the large competitor of the Spanish Inditex was reduced by 21.8%, from 16,180 to 12,652 million crowns (1,220.6 million euros). It is the second fall followed by the benefit, after the year 2017, of 13%. Internet sales, on the other hand, increased by 22%, to nearly 30,000 million crowns (2,894.2 million euros), which already represent 14.5% of total revenues. In Spain, sales grew 2% in the year, with a strong growth of 9% in the last quarter.

The CEO of the company, Karl-Johan Persson, highlights in the note that accompanies the results that H & M has closed a "demanding" year, both for his company and for the textile sector in general, especially for a "difficult" first half of the year. However, he emphasizes that "there are signs that the transformation efforts of the company are beginning to bear fruit" and that the company "is on the right track". H & M has been trying for several months to improve its logistics systems and trying to gain efficiency to reduce costs and increase profits. However, Persson admits that this process accelerated in the last quarter of the fiscal year, which "inevitably resulted in an increase in costs."

The CEO emphasizes above all that they have been able to sell something more without discount. Last year, He blamed the meteorology that the collections could not be sold to full price and that, to give them an exit, they would have had to resort to rebates. Persson points out that, especially in the last part of the year, the collections have been more successful and have not had to reduce too much. Although it admits that the performance of the company does not reach the objectives set at the beginning of the year, it perceives "positive signs" that, with the improvements in the purchasing and logistics processes -they opened three distribution centers in the last quarter with 230,000 meters square- and investments in technology, the good trend of the last quarter will continue. In any case, it announces that the investment will be reduced in 2019, so that the margins will increase.

The fourth quarter was especially good, with a sales growth of 12%, to 56,414 million crowns (5442.4 million euros). The period was extraordinary in some of its main markets, such as in Spain, where sales were up 9% (17% in Swedish kroner), up to 186.5 million euros. In the whole of the year, sales in Spain grew by 2% to 711.3 million euros.

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