Swedish clothing retailer Hennes and Mauritz’s (H&M) profit more than doubled in the first quarter of the fiscal year ended in February, despite analysts’ forecasts for a loss.
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The world’s second largest clothing retailer made a profit of 540 million kroner (47.8 million euros) in the first quarter. In the first quarter of the previous financial year, H&M’s net profit was SEK 217 million.
Analysts had predicted losses for the first quarter in the amount of more than one billion kroner.
H&M’s turnover in December-February increased by 12% to 54.9 billion kroner, largely driven by the effect of the exchange rate. In local currencies, the company’s turnover increased by 3%.
The growth was driven by the markets of Western Europe and America, but turnover in Eastern Europe decreased due to the closure of stores in Russia after that country’s repeated invasion of Ukraine.
In the fourth quarter of the previous fiscal year, H&M suffered a loss of 864 million kroner, raising concerns about the sustainability of low-priced ready-to-wear fashion.
Concerns about H&M’s position have been further exacerbated by the growing market dominance of global clothing retail leader Inditex, which owns the Zara brands, as well as high inflation and the entry of new competitors offering even lower prices.
In November, H&M announced an extensive cost-cutting plan that also includes the elimination of 1,500 jobs.
H&M also operates in the Baltic countries.
