H&M reports dive of 61pc in profits
H&M has warned investors that further prices cuts are on the way in a bid to shift unsold clothes after the Swedish fashion retailer reported a 61pc dive in first-quarter profit that knocked its shares.
The world's second-largest clothes retailer said it would be forced into more discounting after seeing a bigger-than-expected 7pc increase in inventories.
H&M shares were down 6.4pc to 13-year lows in the wake of the news.
The shares have fallen in recent years amid slowing sales hurt partly by shoppers moving online.
The company noted online sales rose by approximately 20pc year on year, however.
"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 digitalization," chief executive Karl-Johan Persson said.
A UK pilot for a "click and collect" model that mixes online sales with physical shopping will be rolled out to more markets, initially in Europe, H&M said.
Pre-tax profit for the three months through February fell to SK1.26bn (€124m), just short of analysts expectations.
Net profit of SK1.37bn was boosted by a one-off positive tax income of SK399m related to US tax reform.
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 said quarterly sales had fallen by 2pc. H&M stood by its full-year guidance for sales growth. (Reuters)