Swedish fashion retailer Hennes & Mauritz AB (H&M) said it is increasing markdowns this quarter after accumulating a record pile of unsold garments worth more than US$4 billion.
Operating profit fell 62 percent to the lowest level in 16 years as inventory rose to 17.6 percent of sales in the first quarter. The stock slumped to the lowest in almost a decade.
“The worrying sign again comes from unabated piling-up of inventory,” Bloomberg Intelligence analyst Chris Chaviaras said.
H&M’s already downbeat forecast for the start of this year was exacerbated by unseasonably warm European weather in January followed by last month’s cold snap, whipsawing the clothing retail industry.
That forced the company to slash prices even more to try to clear inventory.
Chief executive officer Karl-Johan Persson yesterday said the company made mistakes by narrowing its assortment last year, although he expects sales to improve in the second half of this year.
The shares traded 4.1 percent lower at 122.1 kronor as of 9:33am in Stockholm.
H&M plans to reduce markdowns in the second half, when sales should improve, Persson said.
He forecast that the retailer will reduce inventory to 12 to 14 percent of sales next year.
“We haven’t improved fast enough,” said the billionaire chief executive officer, 43. “We’re working hard to fix that.”
The retailer is adding a new brand called Afound to sell clothes from various brands, including H&M at a discount, and it is adding three automated logistics centers this year to speed up deliveries.
H&M last month forecast sales in comparable stores to drop this year before returning to growth in fiscal 2019.
“The next 12 to 18 months will be challenging,” Barclays PLC analyst Alvira Rao wrote, adding that the initiatives might not be enough to keep up with increasing competition.
SETBACK: Apple’s India iPhone push has been disrupted after Foxconn recalled hundreds of Chinese engineers, amid Beijing’s attempts to curb tech transfers Apple Inc assembly partner Hon Hai Precision Industry Co (鴻海精密), also known internationally as Foxconn Technology Group (富士康科技集團), has recalled about 300 Chinese engineers from a factory in India, the latest setback for the iPhone maker’s push to rapidly expand in the country. The extraction of Chinese workers from the factory of Yuzhan Technology (India) Private Ltd, a Hon Hai component unit, in southern Tamil Nadu state, is the second such move in a few months. The company has started flying in Taiwanese engineers to replace staff leaving, people familiar with the matter said, asking not to be named, as the
The prices of gasoline and diesel at domestic fuel stations are to rise NT$0.1 and NT$0.4 per liter this week respectively, after international crude oil prices rose last week, CPC Corp, Taiwan (台灣中油) and Formosa Petrochemical Corp (台塑石化) announced yesterday. Effective today, gasoline prices at CPC and Formosa stations are to rise to NT$27.3, NT$28.8 and NT$30.8 per liter for 92, 95 and 98-octane unleaded gasoline respectively, the companies said in separate statements. The price of premium diesel is to rise to NT$26.2 per liter at CPC stations and NT$26 at Formosa pumps, they said. The announcements came after international crude oil prices
DOLLAR SIGNS: The central bank rejected claims that the NT dollar had appreciated 10 percentage points more than the yen or the won against the greenback The New Taiwan dollar yesterday fell for a sixth day to its weakest level in three months, driven by equity-related outflows and reactions to an economics official’s exchange rate remarks. The NT dollar slid NT$0.197, or 0.65 percent, to close at NT$30.505 per US dollar, central bank data showed. The local currency has depreciated 1.97 percent so far this month, ranking as the weakest performer among Asian currencies. Dealers attributed the retreat to foreign investors wiring capital gains and dividends abroad after taking profit in local shares. They also pointed to reports that Washington might consider taking equity stakes in chipmakers, including Taiwan Semiconductor
STABLE DEMAND: Delta supplies US clients in the aerospace, defense and machinery segments, and expects second-half sales to be similar to the first half Delta Electronics Inc (台達電) expects its US automation business to remain steady in the second half, with no signs of weakening client demand. With demand from US clients remaining solid, its performance in the second half is expected to be similar to that of the first half, Andy Liu (劉佳容), general manager of the company’s industrial automation business group, said on the sidelines of the Taiwan Automation Intelligence and Robot Show in Taipei on Wednesday. The company earlier reported that revenue from its automation business grew 7 percent year-on-year to NT$27.22 billion (US$889.98 million) in the first half, accounting for 11 percent
RSS