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H&M boosts online sales as profits plunge
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For this year's summer months, H&M reported a 32 percent increase in online sales, even as profits shrank 19.2 percent. (Shutterstock/File)
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wedish ready-to-wear giant H&M on Thursday said it saw a major boost in online sales in the third quarter, even as a cumbersome shift to faster logistics weighed down on profits.
Hennes and Mauritz and other global high street chains have been pressing a drive to better integrate online markets, but the transition has faced stiff competition from fast fashion websites popular with millennials, and from behemoths like Amazon.
For this year's summer months, H&M reported a 32 percent increase in online sales, even as profits shrank 19.2 percent.
In a statement, the company blamed the drop in profits on "problems that arose during the implementation of new logistics systems in the US, France, Italy and Belgium during the spring (that) led to extraordinary costs".
Net profit was 3.1 billion krona ($350 million, 300 million euros), with sales hitting 55.8 billion krona, an increase of 9 percent.
"The rapid changes in the fashion industry are continuing and the H&M group is in an exciting transitional period," H&M CEO Karl-Johan Persson said in a statement.
"Our transformation work has contributed to a gradual improvement in sales development with increased market share in most markets during the third quarter, particularly in Germany, Sweden, Eastern Europe, Russia and China."
Read also: H&M accused of failing to ensure fair wages for factory workers
'Long-term perspective'
Persson said H&M is now present online in 47 markets, adding that the company is working "at full speed" to bring the brand's products to more online markets.
He also said the trouble implementing the new logistics systems has now "largely been resolved". The systems, he said, are "an essential part of our work to make our supply chain faster, more flexible and more efficient".
Experts say chains like H&M have struggled to compete with rising fast fashion online brands like Boohoo that are doted with a faster design-to-website product turnaround.
"As always, we have a long-term perspective. Our improvement work is continuing and although many challenges remain, there are more and more indications that we are on the right track," Persson said.
Investors welcomed H&M's rise in online sales, boosting its share price by 10 percent in early Thursday trading on the Swedish stock exchange.
H&M poured $700 million -- 45 percent of its total investments -- in 2017 into efforts to boost its online prowess.
It has meanwhile opened 380 new stores in emerging markets, including Ukraine and Uruguay, in 2018, while shutting down some 140 stores in other countries.
