Fast-fashion giant profit slides; remains upbeat about store growth

H&M isn’t letting a weak second quarter performance stand in the way of its ambitious expansion plans.



The Swedish retailer’s profit in the quarter, which ended May 31, fell 17% to 5.357 billion Swedish kronor ($649.6 million), according to MarketWatch, as unusually cool weather dimmed sales of spring clothing and a strong U.S. dollar added to its costs. The strong dollar will have a negative impact on purchasing costs for the third quarter and a neutral effect in the fourth, the chain said.



Sales increased 2% to 54.34 billion Swedish kronor ($6.56 billion). Sales rose 1% in the United States, which is H&M’s second largest market after Germany.



H&M CEO Karl-Johan Persson was upbeat in comments released with the company’s second quarter results.



“The combination of strong brands, a large body of retail stores in good locations and a successful e-commerce business puts us in a unique market position for future growth,” he said. “Although e-commerce is growing fast, there is still great potential for the H&M group to continue to expand through physical stores – so for us, our continued focus is to grow both through physical stores and online, as well as to integrate these two sales channels.”



The retailer plans a net addition of some 425 new stores in 2016, with an emphasis on growth in China and the United States. It also will enter New Zealand and Cyprus in the fall.



Next year we plan to open four or five new H&M markets, of which Colombia will be one,” said Persson.