Bloomberg News

H&M Fourth-Quarter Profit Declines as Mild Winter Hurts Sales

January 26, 2012

Jan. 26 (Bloomberg) -- Hennes & Mauritz AB, Europe’s second-largest clothing retailer, said fourth-quarter profit fell 2.4 percent, matching analysts’ estimates, as mild winter weather weighed on sales of coats and scarves.

Net income slipped to 5.36 billion kronor ($797 million) in the three months ended Nov. 30, from 5.49 billion kronor a year earlier, Stockholm-based H&M said in a statement today.

The retailer, which sells dresses for $12.95, has reported declining profit for the past five quarters as cotton and labor costs in Asia increase and as consumers scale back spending in its European main market.

H&M “continued to gain market share during what was one of the toughest years for a long time for the fashion retail industry in many countries,” Chief Executive Officer Karl-Johan Persson said in the statement. “The situation in the sourcing markets has also been challenging.”

Sales increased 12 percent at local currency rates so far this month, after rising 13 percent in December. The Swedish retailer, which is selling a collection by Italian fashion house Gianni Versace SpA, last month reported a 3 percent decline in fourth-quarter sales, as shoppers delayed buying winter garments amid mild weather.

H&M slipped 0.2 percent to 224.20 kronor in Stockholm trading yesterday. The stock has risen 1.3 percent this year, less than the 6 percent gain for larger competitor Inditex SA, owner of the Zara chain.

The average estimate for net income was 5.37 billion kronor, according to a Bloomberg survey of 14 analysts.

--Editors: Paul Jarvis, Robert Valpuesta.

To contact the reporter on this story: Armorel Kenna in Milan at akenna@bloomberg.net

To contact the editor responsible for this story: Sara Marley at smarley1@bloomberg.net


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