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30. 09. 11. - 16:00

H&M profit plummets

Hennes & Mauritz (H&M) has suffered a setback in Austria.

The Swedish fashion giant announced yesterday (Thurs) its turnover in Austria in the third quarter of 2011 was 121,000 Euros – 11 per cent lower than in the same time span of 2010. The company added it managed to keep its overall turnover stable in all the countries it did business in at 2.9 billion Euros. However, H&M’s profit dropped by 15 per cent to 388 million Euros.

H&M explained its activities were negatively affected by intense competition featuring many cut-price offers by rivals and immense summer sale initiatives. The firm stressed the recent throwback would not keep it from expanding further. Reports have it that H&M will open hundreds of new stores around the world but also raise its catalogue and online sales activities. H&M currently manages 67 stores in Austria. More than 2,500 people are working for the enterprise in the country.

The Stockholm-based company – one of the most famous brands in the world – will retain its superior position in Austria despite the latest turnover slump thanks to the wide gap between itself and the number two on the domestic market, Germany’s C&A. Peek & Cloppenburg (P&C) is in third place. The German clothing chain recently made headlines by opening a new 11,800-square-metre branch in the city centre of Vienna. The six-storey building was designed by award-winning architect David Chipperfield.

News that H&M is bullish despite lower profits and another P&C shop comes after economists’ warnings that Austrians’ purchasing power was expected to edge down in the coming months. Rising cotton trade prices forced some businesses operating in the fashion sector to implement price hikes, resulting in less interest by cost-conscious customers. At the same time, gloomy forecasts considering the economic stability of some of the European Union’s (EU) 27 member countries are expected to tempt many people to save more.

Meanwhile, S. Oliver sales director Oliver Hein revealed plans to "invest a high one-digit million-Euro sum and open 13 new shops in Austria this year." The businessman told the Kurier newspaper recently that the German clothing chain achieved an overall turnover of 1.07 billion Euros in 2010. He explained that eight per cent were generated in Austria.

Austrian Times

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