Swedish fashion giant Hennes & Mauritz (H&M) today posted a 27 per cent rise in first-quarter pretax profit today, helped by celebrity collections, pop icon advertising and costs control.
The firm, with clothes designed by pop diva Madonna, said it would push up the pace of its store expansion in the second quarter and added February sales were strong.
The launch of its new, higher price concept store had gone well, while sales at its first regular store in Hong Kong had exceeded expectations, said the company which boasts Australian pop queen Kylie Minogue as the face of its new beachwear campaign.
H&M - which opened its Irish first store at Dundrum Town Centre in Dublin last March - reported a pretax profit of 3.41 billion crowns (€366 million) in the first quarter, slightly ahead of forecasts and 2.68 billion crowns (€287 million) in the same quarter last year.
Shares in the firm dipped, however, with analysts having hoped that results would exceed already high expectations.
"That the shares are falling is more to do with the fact that they have done so well before the report than that the report in itself was bad," said Peter Wallin, analyst at Kaupthing. A second analyst said the report was good but "the unofficial expectations were even higher".
February sales were up 15 per cent year-on-year versus analysts' median expectation of a rise of 16 per cent. Like-for-like sales were up 5.0 per cent in February, in line with the median forecast.
Sales in December and January were each up 16 per cent with same-store sales up 5 per cent. Sales for the quarter came in slightly below expectations at 16.77 billion crowns, hurt by a strengthening Swedish crown.
During the quarter H&M extended its cooperation with Madonna, but clothes designed by the pop icon went on sale in March, too late to help the period, which ended in February.
March saw H&M sign a deal with singer Kylie Minogue, who will model the firm's swimwear, and open a new, higher price, concept boutique in London in March.
More up-market Collection of Style (COS) stores are planned around Europe, while in Asia the H&M plans six outlets in China and Hong Kong this year.
The firm said preparations for its COS venture, and an acceleration in the pace of new store openings planned for the second quarter, had raised costs marginally.