Sweden’s Hennes & Mauritz profit jumps in Q2 on higher sales and greater efficiency

Thursday, June 24, 2010

Sweden’s Hennes & Mauritz Q2 profit jumps 25 pct

STOCKHOLM — Swedish fashion retailer Hennes & Mauritz AB on Thursday reported a near 25 percent jump in second-quarter net profit, boosted mainly by a weaker dollar, lower raw material costs and increased efficiencies.

Profit rose to 5.2 billion kronor ($670 million) from 4.2 billion kronor while sales, excluding value added tax, rose to 27 billion kronor from 26.5 billion kronor in the same three months last year.

Europe’s second largest clothing chain said that although the quarter started out with strong sales, most of its markets were hit by the “unusually cold” weather in both April and May.

Despite this, its gross margin, which rose to 65.9 percent in the quarter from 61 percent, was boosted by a weaker dollar, which lowered prices during the company’s buying period for clothes.

In the second half of this year, it plans to open 180 new stores and close 14, most of them in Germany, the U.S., Britain, France, China and Italy.

It also plans to open its first store in Turkey. Next year, it said it will establish itself in both Croatia and Romania, while Morocco will become a new franchise market.

Albert Haeggstrom, head of Swedish equity at asset management firm Alfred Berg, said the report was slightly better-than-expected.

“June was a bit better than thought,” he said, adding also that the chain is showing the same trend as its peers in reporting an improved gross margin thanks in part to favorable currency effects.

The share rose 0.4 percent, to 228.10 kronor ($29.34), in early morning trade in Stockholm.

H&M, headquartered in Stockholm, is present in more than 35 countries, with more than 2,000 stores and around 76,000 staff.


Hennes & Mauritz: www.hm.com

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