Daily Front Row

2010 January 29

H&M's New Heights

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Models at the Paris launch party for the Sonia Rykiel for H&M Underwear collection
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(NEW YORK) A report by the International Monetary Fund predicted the quick recovery of the world economy this year--and it seems Swiss fast fashion retailer H&M is already benefitting. Hennes & Mauritz AB posted a 20.9 percent increase in net profit in the fourth quarter, with a 15 percent increase in sales in December 2009 versus the previous year, and a 13 percent increase in sales in January 2010 (from January 1 to 26). Gross margin rose to 66.3 percent in the fourth quarter from 62.4 percent (in the same quarter of the previous year).

Retail analysts expect that the jump will allow the company to reinvest in expanding its high-fashion offerings, like its recent collaborations with Jimmy Choo and Sonia Rykiel. The highly successful Jimmy Choo for H&M collection, which launched in November sold out in a matter of hours after hitting sales floors, is certainly to be considered when examining the brand's jump in profits, as is the ongoing Sonia Rykiel collaboration (the second leg of the collection, knitwear, launched next week).

H&M currently operates 1,988 stores worldwide, and it plans to open an additional 240 stores in 2010--mainly in the United States, China, France, Germany, and Italy. The company plans to introduce online sales in the United Kingdom this year, and enter the South Korean and Israeli markets. H&M head of investor relations Nils Vinge said that investments for expansion for 2010 are slated at $817.2 million.

Earlier this month, the retailer came under fire when a New York Times article was published regarding the company's disposal of seemingly unworn or damaged merchandise. An H&M spokesperson responded to The Daily at the time of the reports, saying that "the 34th Street situation was not normal for us at all. This is one of our highest-volume stores in the country--we have about 200 in the U.S.--and this week, we were in the middle of our post-holiday cleanup. But there will always be garments that are casualties of day-to-day operations...We are reevaluating what we categorize as damage goods and how we discard what we are not able to donate."
EMILY GYBEN