H&M sales recover in September after weak August

“We have a positive long-term view on China, our position there is strong, as is our profitability”. Most of the increase came from the stronger US currency, and there was a 1.2 billion kronor boost from a new invoice process. The Swedish clothing company has already launched 299 stores there this year and is showing no sign of trepidation in expanding in the region despite a third quarter slowdown in the market.

However, H&M is relentless in its expansionist behaviour: the Swedish concern aims to open 400 stores this year, including firsts for India and South Africa.

“When the weather became more normal in September, sales took off again”, chief executive Karl-Johan Persson said in a statement.

“What they offer, none of the local brands can compete with”, Torsten Stocker, a partner at consultancy AT Kearney in Hong Kong said.

Despite slowing growth across China, the apparel industry has remained a bright area. Net profit only reached 5.306 billion krona (560 million euro), barely more than the 5.296 billion krona from a year ago and well below analysts’ expectations. A flagship Cos. store is soon to open in the heart of Beijing’s top shopping district, selling pants and blouses for about $100.

“Since the USA dollar strengthened further during the purchasing period for the fourth quarter, the purchasing costs for the fourth quarter have continued to be negatively affected”, H&M said.

Sales in the quarter, excluding value added tax, amounted to 46.02 billion kronor, up from 38.81 billion kronor a year ago.

It also said profit margins fell to 55.9% from 58.3% a year ago – its lowest since 2004 – as garment buying costs rose due to the strength of the USA dollar, while it was hit further by discounting in August.

According to the results, H&M’s plans with Fair Living Wages and recycling are also progressing well.