- H&M’s profits fell 28% to £510m in the first half of its financial year
- Sales were broadly flat which boss Persson said was ‘not satisfactory’
- The retailer is investing in logistics systems to get stock to stores faster
H&M’s profits slumped in what the boss dubbed a ‘tough’ first half-year as the Swedish fashion group battled with hoards of unsold clothes.
The world’s second-biggest fashion retailer, which counts Monki, COS and Weekday among its brands, suffered a 28 per cent decline in pre-tax profits to £510m (6.01bn Swedish krona) in the six months to May 31.
Chief executive Karl-Johan Persson said: ‘As we signalled previously, it was going to be a tough first half-year.
‘We went into the second quarter carrying too much stock and we still had some imbalances in the H&M assortment – something that we are gradually correcting.’
This flagship store in Times Square is one of H&M’s circa 4,800 stores across 69 markets
Sales remained broadly flat after falling in the previous two quarters.
But H&M said the performance was ‘not satisfactory’ and still left it with too much stock at the end of the period.
The fashion boss added that, as part of the business’ turnaround efforts, H&M is overhauling its logistics systems to make its supply chain ‘even faster, more flexible and more efficient’.
Chief Executive Officer Karl-Johan Persson gave assurances today that H&M is on the right track
Making the ‘necessary’ changes to the supply chain contributed to H&M’s profit drop as it temporarily disrupted sales in the USA, France, Italy and Belgium.
Its turnaround efforts come as H&M battles to keep pace with fast-fashion rival Zara, the world’s biggest fashion retailer, renowned for its speed to market.
H&M said today that it plans to broaden its product range by introducing lamps and furniture in the second half of 2018.
It will open 240 net stores in the year and said: ‘We still see great potential for new stores in the coming years as our newer brands gradually come to make up an ever greater share of the store portfolio.’
The retailer attempted to assure investors, claiming that ‘things are moving in the right direction, even though many challenges remain and there is a lot of hard work still to do’.