H&M beats forecast with Q1 profits
H&M is bouncing back into recovery, after it reported a buoyant 1st quarter. The Swedish fast fashion retailer saw sales including VAT for the first three months amounted to SEK 29,095m an increase of 7 percent. In local currencies the increase was 13 percent and in comparable units sales increased by 2 percent.
H&M Group sales excluding VAT amounted to SEK 24,846m an increase of 7 percent. The Group opened 10 stores and closed 6 stores during the three-month period. The total number of stores in the Group as per 28 February 2010 thus amounted to 1,992 of which 37 are franchise stores, 23 COS stores and 48 stores within the FaBric Scandinavien Group.
Gross profit for the Group for the first three months amounted to SEK 15,390m an increase of 17 percent. This corresponds to a gross margin of 61.9 percent.
In view of the continued weak economy during the quarter, the company considers that sales have been satisfactory and its spring collections have been well received.Increased markdowns affected the gross margin negatively by 1.6 percentage units compared to the corresponding quarter last year.
H&M is the world's third-largest fashion chain by revenue behind U.S.-based Gap Inc and Spain's Inditex. H&M has rapidly expanded its stores for several years but opened only 10 in the first quarter from a targeted 240 this year, helping to boost operating profit to as it contained costs.Meanwhile, March sales grew 21% compared with a year earlier and sales from stores open more than one year were up 9%. In December 2009, H&M reversed a seven month long streak of declining sales in comparable stores, and although February same-store sales were down 1%, the company is on a solid growth path.
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