Higher costs hit profits at H&M

Net sales in the three months to 30 November increased 10% to SEK62.4bn (£4.9bn), although in local currencies they were flat. Operating profits were SEK821m, compared to SEK6.3bn a year earlier and well below forecasts for SEK3.67bn.

Over the full year, net sales increased 12%, or by 6% in local currencies, to SEK223.6bn, while operating profits came in at SEK7.2bn. Last January, pre-tax profits were SEK14.3bn.

The retailer said that the cost of quitting Russia, the surging prices of raw materials, freight and energy, and the strong dollar, alongside a one-time charge for its restructuring programme, had hit fourth quarter profits by around SEK5bn.

Helena Helmersson, chief executive, said: "Rather than passing on the full cost to our customers, we chose to strengthen our market position further.

"Our highest priority is the H&M brand, where we are continuing to work on improving the assortment and the customer experience both in store and online, while at the same time integrating the two channels further."

Helmersson said the current year had "started well". Sales between 1 December and 25 January rose 5% in local currencies.

She continued: "Despite the tough situation in the world around us, the H&M Group stands strong with a robust financial position, healthy cash flow and a well-balanced inventory.

"“The external factors are still challenging but are moving in the right direction. Our goal of achieving a double digit margin for full-year 2024 remains in place."

H&M, which owns Cos, &OtherStories and Monki, among other brands, is the world’s second largest fashion retailer after Spain’s Inditex.