STOCKHOLM Fashion retailer H&M (HMb.ST) shocked buyers on Tuesday with a small enhance in quarterly revenue and mentioned it will evaluation its mixture of shops and types, and make investments extra in e-commerce, lifting its shares to a one-month excessive.
The world’s No.2 attire group after Zara proprietor Inditex (ITX.MC) mentioned it will verify it had the proper variety of shops and types in every market and that round 70 to 80 new shops this yr can be manufacturers aside from its low-cost H&M chain.
A quicker enlargement for the newer manufacturers, such because the mid-market COS and & Other Stories, brings the group extra consistent with Inditex, whose diversification has helped it to outperform the Swedish group. Zara, the Spanish agency’s largest chain, accounts for lower than 4 in 10 of its shops.
H&M has branched into seven separate ideas lately to broaden its buyer base within the face of more durable competitors within the finances section, and plans to launch one or two extra this yr, however round 9 of 10 shops are nonetheless its predominant finances model H&M.
“These concepts are strong and only at the beginning of their expansion journey,” Chief Executive Karl-Johan Persson mentioned. “They will account for a new wave of growth.”
H&M mentioned it will open round a web 430 new shops this yr, a 10 p.c rise in contrast with 11 p.c up to now yr and greater than some analysts anticipated.
Head of investor relations Nils Vinge mentioned the shop portfolio evaluation would in all probability imply a bigger variety of gross retailer closures and gross new openings than final yr.
Inditex additionally has a enterprise mannequin that always permits it to reply extra rapidly than H&M to adjustments in demand. H&M mentioned it was investing in analytics and the automation of distribution centres to hurry up its personal provide chain.
“With e-commerce and omnichannel the market is quickly becoming increasingly complex, which means new demands for speed and flexibility,” Vinge mentioned.
H&M mentioned on Tuesday it will roll out e-commerce in six extra markets this yr, taking it on-line in 41 of 69 markets at yr finish. It can also be changing a decades-old retailer progress goal with a turnover goal to replicate rising e-commerce.
The firm is now aiming for annual local-currency gross sales progress, together with on-line gross sales, of 10-15 p.c, and expects to be inside that vary from this yr on. In the fiscal yr 2015/16, local-currency gross sales had been up 7 p.c.
Analysts have criticised H&M for not providing companies equivalent to choosing up gadgets purchased on-line in its shops and the corporate responded on Tuesday by saying it will check “click-and-collect” in Britain this yr, was rolling out quicker supply choices and on-line returns in shops in some markets.
The group, whose earnings have fallen for 5 straight quarters, mentioned its fiscal fourth-quarter pretax revenue rose to 7.4 billion crowns ($839 million) from 7.2 billion in the identical interval a yr earlier.
Analysts polled by Reuters had on common forecast a 2 p.c drop to 7.0 billion.
At 1450 GMT, H&M shares had been up 6.2 p.c at 251.5 crowns.
H&M, which had beforehand reported a weaker than-expected turnover for the quarter, in addition to for December, mentioned gross sales from Jan. 1-29 had been up 11 p.c in native currencies.
It cautioned price inflation and foreign money strikes would have barely unfavourable results this quarter on buying prices, and there can be extra markdowns than a yr in the past as a result of weaker-than-expected fourth-quarter gross sales.
(Additional reporting by Helena Soderpalm; Editing by Alexander Smith and Mark Potter)