CHALLENGES MOUNTING
Fashion retailer H&M set to slash prices to get rid of unsold clothes
H&M SAID that first quarter profits have plunged and it plans to cut prices to shift unsold clothes.
The world’s second largest clothes retailer said it would be forced into more discounting following a 61 per cent dive in first quarter profits.
H&M is the world’s secondbiggest apparel retailer after Zara owner Inditex.
The group’s shares have fallen in recent years amid slowing sales, partly due to shoppers moving online.
H&M’s online sales rose by 20 per cent year on year.
The firm’s chief executive Karl-Johan Persson said: “2018 is a transitional year for the H&M group, as we accelerate our transformation so that we can take advantage of the opportunities generated by rapid digitalisation.” The company had warned already in February that markdowns due to weak demand in its main H&M brand stores would hit earnings, and this month it said quarterly sales had fallen by 2 per cent.
H&M stood by its full-year guidance for sales growth at its newer brands and online growth of more than 25 per cent.
RBC analyst Richard Chamberlain, who holds an “underperform” rating on H&M, said: “The outlook seems optimistic and inventory levels meant risks of further markdown pressure in coming quarters.
“We are concerned that H&M is over-distributing and may be forced to cut its dividend this year or next if sales trends remain sluggish.”
2018 is a transitional year for the H&M group. Karl-Johan Persson, chief executive of H&M