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H&M Q4 Sales Down On Weakness In Physical Stores; Stock Dips


Shares of Hennes & Mauritz AB or H&M (HNNMY.PK,HMRZF.PK,HEN.L) were plunging around 13 percent in Sweden after the retailer reported lower sales in its fourth quarter with weakness in H&M brand's physical stores. However, H&M brand's online sales and sales of the group's other brands continued to develop well, the company said.

The second largest fashion retailer's sales for the year improved as it continued to grow during the year.

Karl-Johan Persson, CEO said, "the growth was dampened by the fact that the sales development in the fourth quarter was significantly below the company's own expectations. ….the quarter was weak for the H&M brand's physical stores, which were negatively affected by a continued challenging market situation with reduced footfall to stores due to the ongoing shift in the industry."

In addition, there have been imbalances in parts of the H&M brand's assortment composition, the company noted. In order to correct this, a number of actions have been taken.

The company has accelerated its ongoing transformation journey in order to respond even quicker to customers' fast-changing behavior. Among other things, this includes continued integration of the physical and digital stores, and intensifying the optimisation of the H&M brand's store portfolio - leading to more store closures and fewer openings, it said.

The company added that it recently strengthened the management team of the H&M brand.

In the fourth quarter of 2017, sales including value added tax or VAT amounted to 58.45 billion Swedish kronor, down from 61.10 billion kronor in the prior year. Sales excluding VAT amounted to 50.39 billion kronor, down from 52.7 billion kronor a year ago. In local currencies, sales decreased by 2 percent.

For the full-year 2017, H&M group's sales including VAT increased by 4 percent to 231.74 billion kronor from 222.87 billion kronor, prior year. Sales excluding VAT amounted to 199.99 billion kronor compared to 192.27 billion kronor. In local currencies, sales increased by 3 percent.

The company will publish its fiscal 2017 report on January 31.

In Sweden, H&M shares were trading at 174.10 kronor, down 13.08 percent.

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