Fashion retailer H&M reported a 34-percent fall in quarterly profit as its core brand’s stores attracted fewer shoppers, and said it might ask investors to reinvest dividends to help finance investments.
Following decades of rapid expansion, the world’s second-biggest clothes group after Zara owner Inditex has struggled to respond as shoppers move online and competition intensifies. Its shares have been in retreat for three years.
Pretax profit in the three months through November, H&M’s fiscal fourth quarter, shrank to 4.9bn Swedish crowns (£440m), better than the mean forecast in a Reuters poll of analysts for 4.72bn.
H&M said in December that sales in the quarter unexpectedly fell, triggering a dramatic sell-off in its shares as well as large profit estimate cuts and stock target price cuts by analysts.
“The industry changes are challenging everyone and this will continue in 2018”, chief executive Karl-Johan Persson said in a statement, adding that H&M does not expect to reach a target of local-currency sales growth of 10–15 per cent this year.
H&M as expected proposed an unchanged dividend, but added:
“In view of continued high investments in areas such as digitalisation, the board of directors is to investigate the possibility of offering all shareholders an opportunity to reinvest the dividend received in newly-issued H&M shares.”
H&M, which has launched a number of independent higher-end brands in recent years to broaden its customer base, said it would in 2018 launch one more, offering budget products from external brands as well as its own brands.
It also said it would start selling the H&M and H&M Home brands on e-commerce platform Tmall in March.
H&M said price cuts to shift unsold goods increased in the quarter. Inventories, which have been growing over the past two years, were also up again.
Reuters
