H&M Sets New Annual Growth Target as Online Division Expands

Fashion retailer H&M (HMb.ST) surprised investors on Tuesday with a small increase in quarterly profit and said it would review its mix of stores and brands, and invest more in e-commerce, lifting its shares to a one-month high.

The group, whose profits have fallen for five straight quarters said its fiscal fourth-quarter pretax profit rose to 7.4 billion crowns ($839 million) from a year-ago 7.2 billion.

The retailer has started to introduce algorithm-driven advanced analytics that it says will contribute will "contribute to improvements within everything from assortment planning and logistics to sales". The company is no longer targeting 10 percent to 15 percent growth in stores as it expands more in online sales.

"We welcomed more than 13,000 new colleagues which means there are now more than 161,000 colleagues in the group", said CEO Karl-Johan Persson.

Furthermore Persson gave the reference to "geopolitical events" which he said had had a adverse bearing on the retail business, predominantly in France, Germany, Switzerland and Italy as well as the United States and China. In the fiscal year 2015/16, local-currency sales were up 7 percent.

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The Spanish retailer's profits after tax stood at £1.7bn (18.636bn kronor) in the year ending 30 November 2016. H&M also said it plans to add one or two new brands this year.

Swedish retailer Hennes & Mauritz said on Tuesday it was dropping its goal of opening 10% to 15% more stores each year and instead turning its focus to getting more revenue from existing stores, a tacit recognition that its store fleet is nearing the saturation point in many markets. The sales target includes both stores and online sales. Beyond 2017 the company has chose to give up such rapid store expansion in favor of more online trade.

On the Stockholm Stock Exchange, the group's shares surged almost five percent in early business, vastly outperforming the overall market which was up by 0.8 percent. He said that the geopolitical events such as terror attacks and the United Kingdom vote to leave the European Union (Brexit) have taken a toll in many markets.

H&M has 35 online markets and planned to add six more this year: Turkey, Taiwan, Hong Kong, Macau, Singapore and Malaysia.

  • Rita Burton