H&M to greatly expand beauty offer through new concept as Q4, full-year results impress

Hennes & Mauritz is to expand its beauty offer on a grand scale this year as the Swedish fashion giant on Wednesday reported stronger-than-expected Q4 net profits and further plans to open 400 stores in 2015. The retailer also said its January sales are expected to be up 14%, also ahead of expectations.

Under the banner H&M Beauty, the retailer will introduce a broad range of make-up, bodycare and haircare products initially through around 900 stores in 40 markets and online from this autumn.

CEO Karl-Johan Persson said the range will be based on high quality, value-for-money products in a specially produced design “that we have great belief in”. It will replace its current own-brand cosmetics.

Meanwhile, H&M also spoke of well-received collections for all its brands behind “good sales and increased market share” last year.

With Persson describing 2014 as “a very good year for H&M”, the group reported net profit for the final three months to November 30 jumping 12% to SEK6.22bn ($760m) from SEK5.50bn a year ago, beating analysts’ expectations for profits of SEK 6.19bn.

Revenue rose 11% in local currencies to SEK42.64bn. Excluding VAT, net sales rose 17%.

Gross margin inched down to 60.4% of revenue from 60.8%.

For the previous fiscal year, H&M Group’s sales increased 14% in local currencies. Excluding VAT sales rose 18% to SEK151.4bn. Net profit increased 17% to SEK19.97bn.

Strong expansion during the year saw 379 new stores added to its portfolio with the largest expansion seen in China and the US. At the end of the financial year its store count stood at 3,511 units in 55 markets. It noted H&M’s first stores in Manila were “very well received” since opening in October.

H&M said the additional 400 new stores planned for 2015 will take place within existing markets although Taiwan, Peru, Macau, South Africa and India will be its debut markets this financial year.

Sister brands COS and & Other Stories will also open more new stores this year compared with 2014.

Meanwhile, Belgium, Bulgaria, the Czech Republic, Hungary, Poland, Romania, Slovakia and Switzerland will become new H&M online markets in 2015.

Persson said: “2015 has got off to a good start, with strong sales in both December and January. Although the increasingly expensive US dollar will affect our sourcing costs, we will make sure that we always have the best customer offering in each individual market in terms of fashion, quality, price and sustainability, which form the basis of our business idea.”

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