H&M profits drop 60% as fast-fashion chain cuts prices to shift stock
A fortnight after cautioning first quarter sales had fallen by around 1.5 per cent on last year, Swedish fashion group H&M laid out just how costly the first three months had been. Pre-tax profits were down 60 per cent from the same time a year ago, hit both by poor sales and higher markdowns.
“The rapid transformation of the fashion retail sector continues,” chief executive Karl-Johan Persson said. “The start of the year has been tough.”
The wrong mix of stock at its flagship brand necessitated “substantial clearance sales” while “unusually cold winter weather” stopped shoppers from freshening up their wardrobes for spring.
Pre-tax profits slumped to SKr1.3bn (€130m) from SKr3.2bn a year ago. Gross margin slipped from 52.1 per cent in the first quarter of 2017 to 49.9 per cent.