H&M (HNNMY) shares rose more than 5% in early trading in Stockholm Tuesday after the fast-fashion retailer lifted its 2017 growth target after posting sales full-year sales that were largely in-line with analysts' expectations.
H&M said it plans to increase sales by 10% to 15%, in local currency terms, this year while maintaining "continued high profitability" in a competitive marketplace. The Stockholm-based group also said it plans to launch one or two new brands in 2017.
H&M shares traded 5.6% higher by 08:30 GMT to change hands at Skr249.8 each, trimming their three-month loss to 1.7% against a 1.01% gain for the Stoxx Europe 600 Retail index.
H&M said sales between from Dec. 1, 2015 and Nov. 30, 2016 increased 7% in local currency terms and 6% when converted to the Skr192.3 billion ($21.7 billion) total, a figure that was broadly in line with analysts' expectations. Gross profit for the period increased by 2.9% to Skr106.2 billion, the company said, corresponding to a gross margin of 55.2%, down from 57%.
"Our sales increased by 7 percent in local currencies to SEK 223 billion - our highest annual turnover to date - although sales performance was lower than planned, which led to increased mark-downs," said CEO Karl -Johan Persson. "This, combined with the fact that the strong US dollar made our purchases more expensive, had a negative impact on our profit development for the full year. However, profits improved in the fourth quarter."
Sales in the company's fiscal fourth quarter increased by 7% in local currency terms and 8% when converted to kronor, the company said, while gross margin in the three ending in November was 57%, with profit coming in at Skr30 million.
