HENNES & Mauritz (H&M) yesterday blamed “substantial long-term investments” in new brands, technology and its online business for lower than expected profits.
The Swedish retailer said pre-tax profit rose 11 per cent to 7.3bn Swedish crowns in the year to 30 November, missing analyst forecasts of around 7.6bn crowns.
Gross margin also disappointed, falling to 60.8 per cent from 61.6 per cent, which H&M said was largely due to foreign exchange rates.
“This is a good result considering the substantial long-term investments that we are making in areas such as IT, online, new brands and broadening our product range,” said chief executive Karl-Johan Persson.
To counter growing competition from discounters such as Primark, H&M has created new higher-end brands such as & Other Stories, which launched in March last year.
After a slow start, H&M is also aggressively expanding its online business, with a French language website due to launch this spring followed by three further country-specific sites later this year.