Strong dollar, mild weather shrink H&M profits

FIRST QUARTER RESULTS. The H&M logo at a store in London, Britain on November 17, 2008. File photo by Andy Rain/EPA

STOCKHOLM, Sweden – Swedish clothing retailer Hennes et Mauritz (H&M) on Wednesday, April 6, posted first quarter profits down almost 30% on a strong dollar and mild weather hitting its winter collection.

The Stockholm-based fast fashion firm said December 2015 through February 2016 profits came in at 2.54 billion kronor (275 million euros/$310 million), down from 3.61 billion a year earlier albeit slightly ahead of analysts' forecasts.

Sales were up 8.5% year-on-year or 9% in local currency terms at 43.7 billion kronor compared with a 15% rise in the first quarter of 2015.

The results "reflect more expensive supply given the [strong] dollar and increased discounting due to high volume of unsold merchandise in winter collections following a mild winter," CEO Karl-Johan Persson said.

With a sizeable proportion of production costs linked to the dollar the currency effect is likely to weigh on second-quarter results before fading away from the third quarter on, H&M predicted.

The chain is to continue its recent international expansion by taking its global store base count past 4,000 this month – double 2010 – by opening a store in India.

Further expansion is planned in the months ahead in South Africa, Switzerland, and Hungary. – Rappler.com