H&M holds out prospects for higher earnings

H&M store. Pic: Frank Reid
H&M store. Pic: Frank Reid
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Fashion firm H&M held out the prospect of higher earnings this year as it looked to reassure investors unnerved by years of slumping share values for the world’s second-biggest fashion retailer.

The rival of Zara owner Inditex also forecast growth of at least 25 per cent in sales online and in its new brands such as COS and H&M Home in 2018 and further expansion around those levels in the years ahead.

A success story for decades, H&M has in recent years seen sales growth stall as it struggles to keep up with digitalisation and shoppers’ moving online, and to fend off increased competition in its core budget segment.

Shares in H&M, which is controlled by the Persson business family, have slid for three straight years, shedding more than half their value from a record high in March 2015 amid mounting market scepticism the company has a viable turnaround plan.

In a bid to assuage investors calling for detail on strategy and performance, the company is holding its first ever capital markets day of briefings for analysts and investors, on the island of Djurgarden in the heart of the Swedish capital.

In a statement released ahead of the event, the company said it expected growth online and in its new brands to boost growth in 2019 through 2022, while its brick-and-mortar stores were expected to return to growth from next year.

Karl-Johan Persson, chief executive of H&M, said: “Overall, this is expected to lead to good increases in profit.”