Fast-fashion giant H&M has released their nine months financial reports and increased profits by 19% in their 3rd quarter. This is quite remarkable given the difficult economy, especially when it comes to teen retailers. While Abercrombie & Fitch, Hollister, and others are struggling to gain the attention it once had from teens, H&M, as our research shows, continues to be a key place to shop.
There are many reasons for this, including price, timeliness of fashionable styles that match the lifestyles of young people, including growing concerns for sustainable clothing, and increase in ecommerce stores which is also where this tech-savvy demographic is heading.
H&M has also announced that it will be moving into sportswear more heavily in the near future, increasing its footwear offerings and launching its Conscious Denim collection in October.
Continued strong sales development for the other brands in the H&M Group: COS, & Other Stories, Monki, Weekday, Cheap Monday including their upcoming 10-minute pop-up retail concept, and H&M Home.
Here’s more: H&M’s online sales in Italy and Spain, which were launched in August, have got off to a very good start. H&M’s online store in China, which was launched already in September, has got off to a very good start.
Strong expansion in 2014, with approximately 375 new stores net in total.
- The Philippines will become a new H&M market in October 2014.
H&M’s opening in India, planned for autumn 2014, has been postponed until 2015. In 2015 H&M will also open in South Africa, Peru, Taiwan and Macau.
- H&M plans to open 8 – 10 new online markets in 2015.
Comments by Karl-Johan Persson, CEO: ”We have continued to gain market share thanks to strong sales development for all our brands. We see this as proof of well-received collections. Combined with our expansion, this led to a sales increase of 21 percent in SEK in the quarter. Also the good growth in profits continued with an increase in operating profit of 20 percent – while we at the same time are in a very intensive investment phase to build an even stronger H&M.
So far this year we have increased sales by 18 percent in SEK after nine months and increased operating profit by 20 percent, i.e. by almost SEK 3 billion to SEK 17.9 billion.
Within online shopping, we are in the midst of an exciting expansion. This year we have opened four big new H&M online markets and next year we will open another 8 to 10 new H&M online markets. Our online openings have taken place at a rapid pace this year: France in March, Italy and Spain during August and already, in September, we have launched online sales in China. We have had a very good response from customers in all these countries. We see our online store as a very important complement to our physical stores as the online store makes it possible for us to increase our level of service and availability to our customers.
Our store expansion plan for 2014 remains intact, with a planned net addition of 375 new stores. During the summer, we opened another flag ship store on Fifth Avenue in New York. In October the Philippines will become a new H&M market whereas India, which was supposed to open in the autumn, has been postponed until 2015. In 2015, we also plan to open in South Africa, Peru, Taiwan and Macau.
We are looking forward to a busy and exciting autumn. Besides our store and online expansion, we are continuing to develop our customer offering including the broadening of H&M Sport and our extended shoe range, which will be available online as well as in selected stores during the autumn. In October, we will launch our new collection “H&M Conscious Denim” which is made of more sustainable materials.
Part of the collection includes recycled cotton from our global “Garment Collecting” initiative, which is part of our work on closing the loop for textiles as we want to reduce the environmental impact of clothing during its life cycle.
Sustainability is important to both our customers and employees, and we are therefore using our size and influence to drive progress on both environmental and social issues. When our customers shop with us they need to feel sure that they are buying from a company that takes responsibility. We are convinced that our investments in sustainability are the right thing to do, even though it entails costs in the short term. We always take a long-term view, and we see sustainability as an investment in our common future.”