H&M’s net profit for Q3 dropped by 20 per cent. Sales grew 4.6 per cent. Its online sales continued to develop well. However, its growing online sales did not fully compensate for reduced footfall to stores in several of its established markets, which has resulted in H&M’s total sales development not reaching targets so far this year.
This meant that H&M entered the third quarter with an inventory level that was too high. An aggressive summer sale policy brought stocks down, and the autumn collection got off to a good start but sales slowed towards the end of September. The group’s online sales currently represent up to 30 per cent in some of H&M’s established markets. Online sales are expected to rise by at least 25 per cent per year in the future.
The competitive landscape is being redrawn, new players are coming in and customers’ behavior and expectations are changing, with an ever greater share of sales taking place online. Meanwhile, the Swedish fast fashion retailer is continuing to invest in bricks-and-mortar operations, having opened its first physical stores in Kazakhstan, Colombia, Iceland and Vietnam, with its first Georgia outlet coming later in the year.