H&M adds Arket to its brand stable

STOCKHOLM: Swedish clothing giant Hennes & Mauritz AB (H&M) yesterday announced the launch of its eighth fashion brand as tough market conditions in the US and Central Europe hurt profit.

The company reported a 3.4% drop in net profit in the December to February period, the first quarter of the company’s financial year, due to the combination of a slower-than-expected rise in revenues and seasonal discounts.

“To meet the rapid change that is going on in fashion retail we need to be even faster and more flexible in our work processes, for example as regards buying and allocation of our assortment,” chief executive Karl-Johan Persson said in a statement.

H&M posted a net profit of 2.45 billion kronor ($275 million), while turnover was up 8% to 46.98 billion in the same period. Sales increased by 4% in local currencies, but the group has a target of 10-15% per year.

“For fashion retail in general, market conditions were very tough in many of our large markets in central and southern Europe and in the US, and this was reflected in our sales,” Persson said.

The new brand, Arket, will be launched in the third quarter, with the first store to open in London followed by Brussels, Copenhagen and Munich and online operations in 18 European markets.

Arket is the company’s first new label since the launch of & Other Stories in 2014 and will have a focus on men. The range will be supported by a selection of external brands including sneakers from Venga, and shoes from Tricker’s and RM Williams. Where possible, the stores will also include a cafe.

Arket’s price range will be most similar to that of the retailer’s COS brand, which sells cotton parka jackets for £125 and suede Oxford shoes for the same price.

“The concept of Arket is quite unlike anything we’ve seen from the company before,” Bernadette Kissane, apparel and footwear analyst at researcher Euromonitor International said.