H&M shares worse for wear as results disappoint
Shares in Hennes & Mauritz got a dressing down Wednesday as disappointed investors sold them in reaction to threadbare earnings and holes in the Swedish fashion retailer's online strategy.
Reporting a 13 percent drop in its net profit for the 12 months to November, H&M said its bricks-and-mortar stores were fast losing customers while it struggled to boost its online sales to make up for the shortfall.
The company's shares were down by nearly seven percent in mid-session business on the Stockholm stock exchange, taking their decline over the past 12 months to just under 42 percent.
"Our performance during 2017 was mixed, with progress in some areas but also difficulties in others," CEO Karl-Johan Persson said in a statement, adding that sales growth was "clearly below our expectations".
Persson said his company's performance had to be "seen in the wider context of the transformation that the industry is going through", but admitted that it needed "to accelerate" its coping strategy.
"Our online sales and our newer brands performed well but the weakness was in H&M's physical stores where the changes in customer behaviour are being felt most strongly and footfall has reduced with more sales online," he said.
H&M's product mix also contributed to the weaker result, he said.
Sales dropped in Germany, the company's biggest market, Britain and the Netherlands, but rose in its number two market the United States, as well as in France, China and Sweden.
The Swedish company runs 4,500 physical outlets across the world and plans to open 390 stores more and close 170.