By Jens Hansegard
STOCKHOLM--Swedish clothing retailer Hennes & Mauritz
(HM-B.SK) on Thursday said sales in China have been particularly
strong in its third quarter, as it reported net profit rose 22% on
the year, topping expectations.
"China is the country where our expansion is strongest," Chief
Executive Karl-Johan Persson said, adding that the company opened
its store number 3,000 in Chengdu this September. H&M had 170
stores in China on Aug. 31.
The company said its online store in the U.S., launched in
August, has been well received by customers.
"H&M will continue its rapid store expansion in the U.S. and
sees online shopping as an important complementary sales channel in
order to reach even more customers and thereby further strengthen
H&M's position in the U.S.," Mr. Persson said.
The company said it is continuing to work on the global roll-out
of the online store and plans to launch online shopping in more
markets during 2014.
The company repeated its target of increasing its number of
stores by 10% to 15% a year, and said that most of the 350 new net
stores planned for 2013 will open in China and the U.S.
Sales from Sept. 1 to Sept. 24 increased by 8% in local
currencies, the company said, adding that the full month of
September will have a negative calendar effect of about 2
percentage points.
The closely-watched gross margin rose to 58.8% in the third
quarter from 58.2% last year. H&M said external factors such as
raw material prices, cost inflation, and transportation costs were
neutral during the purchasing period for the third quarter compared
with last year.
"Margins look good, much stronger than we and consensus had
expected," says Bernstein analyst Jamie Merriman.
Net profit rose to 4.43 billion Swedish kronor ($690 million) in
the third quarter, from SEK3.62 billion last year. Analysts had
expected a net profit of SEK4.14 billion.
Sales excluding value-added tax in the third quarter rose to
SEK32.04 billion from SEK28.81 billion last year. Operating profit
was SEK5.76 billion, up from SEK4.80 billion last year. Analysts
had expected operating profit of SEK5.33 billion.
Shares ended Wednesday at SEK263.90, just a few kronor off
H&M's record high, valuing the company at SEK436.77
billion.
Write to Jens Hansegard at jens.hansegard@dowjones.com
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