H&M 4Q profit rises 21 pct on new store openings
(AP) — Swedish fashion chain Hennes & Mauritz AB on Thursday reported a 21 percent rise in fourth-quarter net profit, as new store openings helped it defy the weak market.
Europe's No. 2 fashion retailer said net profit in the three months to Nov. 30, its fiscal fourth quarter, increased to 6.2 billion kronor ($851 million) from 5.1 billion in the same period a year ago.
Sales, excluding VAT, rose 6.5 percent to 28 billion kronor ($3.84 billion) from 26.3 billion and the gross margin was 66.3 percent, up from 62.4 percent in the fourth quarter 2008.
The result beat analysts' expectations and sent up H&M shares 7.4 percent to 432.2 kronor ($59.2) in early trading on the Stockholm stock exchange. A Six Estimates poll published by Dagens Industri had forecast sales of 27.8 billion kronor ($3.81 billion) and a gross margin of 62.6 percent.
The company said sales in local currencies increased by 3 percent and fell by 6 percent when excluding the impact of new store openings.
"The weak sales increase is mainly explained by continued recession with restrained consumption, a discount-driven market and mild weather during the autumn which had a negative effect on sales of weather dependent garments such as jackets and heavy knitwear," H&M said in a statement.
It said the rate of store expansion during the year was higher than originally planned, mainly because the economic downturn provided opportunities for new store projects.
H&M had 1,988 stores at the end of November, up from 1,738 a year earlier.
It said it will open another 240 new stores in the coming year, most of which will be in the U.S., the U.K., China, France, Germany and Italy.
Full year net profit rose by 7 percent to 16.4 billion kronor ($2.3 billion) while full year sales climbed 15 percent to 101.4 billion kronor ($14 billion).
H&M proposed to raise the dividend per share to 16 kronor ($2.2) from 15.5 last year.