June 22 (Bloomberg) -- Hennes & Mauritz AB, the world’s second-largest clothing retailer, reported an 18 percent decline in second-quarter profit, missing analysts’ estimates, as the cost of making garments increased.
Net income fell to 4.26 billion kronor ($670 million) from 5.21 billion kronor in the year-earlier period, the Stockholm- based company said in a statement today. The average estimate of 16 analysts compiled by Bloomberg was 4.37 billion kronor.
The drop in quarterly profit is the third in succession, the first time that’s happened in at least a decade. H&M, which sells bikini tops for less than 7 euros ($10), sought to gain shoppers by avoiding price increases, eroding profitability as labor costs increased in Asia and cotton prices traded near records.
“We are optimistic about the future for H&M despite challenging conditions both in the sales markets and in the sourcing markets,” H&M Chief Executive Officer Karl-Johan Persson said in the statement.
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