Hennes & Mauritz, the Swedish fashion chain controlled by the Persson family, has reported an 18% drop in third-quarter net profit, as global economic conditions hit the fast-fashion retailer.
Although sales remained similar – SEK 26.91 billion (€2.9 billion) in 2011 compared to SEK 26.89 billion in 2010 – during the quarter, profits dropped to SEK 3.59 billion from 2010’s third-quarter figure of SEK 4.85 billion.
Profits for the nine-month period to the end of August were even harder hit, falling to SEK 10.46 billion from SEK 13.19 billion during the same period in 2010, despite sales rising by 9%.
The company, which was founded as a family business in 1947 by Erling Persson, said sales in Swedish krona were “strongly negatively affected by currency translation effects”, while high procurement costs have also hit its bottom line.
However, in a statement, chief executive Karl-Johan Persson, the grandson of Erling, said H&M continues to gain market share and has “great respect” for the current economic climate.
“In this situation, it is extra important to have a long-term perspective and to always make sure that we give customers the best combination of fashion and quality for their money in every market,” he added.
The 36-year-old, who took over running the retailer in 2007, said H&M is focusing heavily on expanding.
“We are increasing our expansion for full-year 2011 to approximately 265 new stores net, from the originally planned 250,” he said.
H&M’s first store in Singapore opened in September, while Indonesia and Thailand will become new H&M franchise markets next year, the company also announced.