CEO Expects Tough Times Ahead
- H&M reports a 22% drop in profits before taxation for the first half of the year
- CEO Karl-Johan Persson expects a ‘tough first half-year’
- Net sales were almost flat at 51.98bn Swedish krona (£441m)
- Closing inventory was too high due to weak sales
- Sales for 2018 Q1 fell slightly to 98.2bn krona compared to the previous year
- Company plans to open around 390 stores and close 150, resulting in a net addition of 240 new stores for the year
Swedish fashion retailer H&M has reported a 22% drop in profits before taxation for the first half of the year, with CEO Karl-Johan Persson anticipating a challenging period ahead. Profits fell to 6bn Swedish krona (£510m), and net sales were almost flat at 51.98bn krona (£441m). The company’s overall sales for Q1 2018 dropped slightly to 98.2bn krona, compared to the previous year’s 98.4bn. H&M also experienced stockpiling issues due to weak sales, attributing high levels of clothing stock to the problem. The company, which owns brands Monki, & Other Stories, and Cos, plans to open around 390 stores and close 150, resulting in a net addition of 240 new stores for the year. Persson stated, ‘The rapid transformation of the fashion retail sector continues, and we are in a transitional period that is both exciting and challenging.’ He added, ‘We went into the second quarter carrying too much stock and we still had some imbalances in the H&M assortment – something that we are gradually correcting. Overall, however, total sales for the quarter were not satisfactory, which meant that inventory levels were still too high at the end of the period.’
Factuality Level: 8
Factuality Justification: The article provides accurate and objective information about H&M’s financial performance, including profits, net sales, and inventory issues. It also includes a quote from the CEO that adds context to the situation. However, it could provide more details on the reasons behind the drop in profits and the specific impact of stockpiling issues.
Noise Level: 3
Noise Justification: The article provides relevant information about H&M’s financial performance and its CEO’s comments on the challenges faced by the fashion retail sector. However, it lacks in-depth analysis or exploration of long-term trends or possibilities, as well as actionable insights for readers.
Financial Relevance: Yes
Financial Markets Impacted: H&M’s stock price and other fashion retail stocks may be impacted by these financial results
Financial Rating Justification: The article discusses a drop in profits for H&M, which is a publicly traded company in the fashion retail industry. This information could potentially affect its stock price and investors’ decisions, as well as the performance of other companies in the same sector.
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: No
Extreme Rating Justification: There is no extreme event mentioned in the text.
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