H&M feels pinch of strong dollar but keeps expanding

New York -- Swedish fast-fashion giant H&M isn’t letting the strong U.S. dollar hurt its expansion plans.



The chain plans to open about 400 new stores in 2015-2016. It is expanding into five new markets: Taiwan, Peru, Macau, South Africa and India. Other plans include the launch of H&M Beauty this July, starting in about 900 stores and online. The company also hinted at the development of a mysterious new brand.



H&M’s net income rose 11% to $783 million in the three months through May, less than expected. Its gross margin shrank to 59.4% from 60.8% in the year ago period, which also missed analysts' forecasts.



The retailer, which buys most of its clothes in Asia with U.S. dollars, cited the strong dollar and said costs could continue to increase depending on exchange rates. It warned that the rising dollar will have a “very negative” effect on garment costs in the second half of the year.



In a Bloomberg report, H&M CEO Karl-Johan Persson said the company is developing a new concept" completely different" from anything it has done before, and that it would not be related to H&M’s sister brands, which include & Other Stories and COS.



H&M has more than 3,600 stores in 59 markets.