H&M forecasts tough 2018 as it focuses on online
H&M spelled out its ambitions for revamping its online business ahead of its first ever capital markets day on Wednesday, warning like for like sales were expected to continue to fall through a difficult year but investment in its newer brands and website gave “good opportunities for a somewhat better result” than last year.
The Swedish group has lagged behind online brands such as Asos and suffered both from saturation and competition on the high street, prompting the pitch to investors.
H&M said online sales were expected to rise by at least 25 per cent this year and around 20 per cent for each year through to 2022, hitting SKr75bn (€7.6bn) by then under its plans. Sales from the retailer’s new businesses, which include brands such as Cos, & Other Stories and Monki, were forecast to grow by 25 per cent each year, reaching SKr50bn by 2022.
Online sales accounted for around an eighth of future sales last year, it said, at around SKr29bn, and made up just over a fifth of its operating profit, while new brands represented 7 per cent of sales — but an undisclosed amount of profit (or loss).
“In addition, there are great opportunities for further additional sales from two separate and completely new business models that the company is currently developing”, H&M said, without elaborating on the details of those business plans.
Physical stores were expected to return to like-for-like sales growth from 2019, it added, with “considerably lower markdowns” compared to last year expected to help gnenerate “good increases in profit”.
Poor stock management at the end of last year was one of the major issues that had weighed on the group’s start to 2019, H&M said, citing a “tough start with high opening stock levels from Q4 2017 and imbalances in the product range” that led to high markdown costs and hurt earnings at the start of the year.