Hennes & Mauritz, the Swedish fashion retail giant, was strong in the second quarter. The company reported that its total sales were healthy, and its profit increased compared to the same period of last year. The increase was more than expected. However, same-store sales decreased slightly, and gross margins declined due to currency hedging.
The Swedish fashion retailer Hennes & Mauritz reported on Wednesday that its same-store sales decline in June was worse than expected. This shows that although the economic recession sent an initial signal of recovery, the situation is still grim.
H&M, the worldâ€™s third-largest fashion chain after Gap and Spainâ€™s Inditex Group, lost 5% of its comparable sales in June. Total sales including new store sales increased by 4% over the same period. The sales figures for May show that this monthâ€™s situation is somewhat disappointing compared to last yearâ€™s strong situation.
In the quarter ended May 31, H&M's sales rose strongly by 23% to SEK 26 billion (US$3.37 billion). Although converted into local currency due to currency hedging, this figure has been reduced to 8%. Same-store sales fell 2% during the quarter.
Pre-tax profit rose 6% to 5.78 billion kronor, which was higher than the 5.67 billion kronor previously estimated by Reuters. The net profit was 4.19 billion kronor, which was higher than the 3.94 billion kronor last year.
In the first half of the year, H&M's sales increased by 21%. Pre-tax profit fell 2% to 6.77 billion kronor, and last year's pretax profit was 6.88 billion kronor.
After maintaining strong growth, H&M will continue its global expansion plan this year. In the first half of this year, 93 new stores will be opened and 9 will be closed. By the end of June, H & M operated 1,827 stores, compared with 1,600 a year ago.
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