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H&M expansion will not be halted by currency headwinds

H and M

There’s just no holding H&M back. Despite the strong dollar denting Q3 profits and margins the Swedish fashion giant said it will hit its target of opening 400 stores this year, with China and the US the core markets. In Q4 alone, it will open 240 brick & mortar stores, including debuts in India and South Africa.

And let’s not forget its online adventure with nine new markets planned for 2016 in addition to Russia and Switzerland opening for business this year.

It also pointed to “well-received collections for all brands” for its “good” sales and increased market share.

In September alone, the performance is so far looking very muscular, up 12% year-on-year in the three weeks to the 22nd.

If that’s not enough good news, H&M also said it has recorded a “very good start” for H&M Beauty since its launch in July, now available in around 700 stores in 28 markets and online. Expect the roll-out to hit another 14 markets during the autumn.

So how severe were those currency headwinds? Enough to result in net profit of SEK5.31bn ($630.8bn) in the three months to August 31 from SEK5.30bn a year earlier, short of analysts’ forecasts for SEK5.33bn.

Gross margin also slipped to 55.9% from 58.3%, on the strength of the dollar.

But Q3 sales, excluding VAT, raced ahead to SEK46.02bn from SEK38.81bn last time. For the nine months sales, excluding VAT, increased by 22% to SEK 132.16bn, or up 12% in local currencies. Profit, post items, rose 11% to SEK20.09bn.

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