Swedish retailer H&M’s 11 percent profit fall, announced Wednesday, was largely due to a stronger Swedish krona and higher markdowns as the retailer tried to move product.
Net profit for March-May fell to 4.66 billion kroner ($720 million), down from 5.22 billion last year. Sales slipped slightly, from 31.66 billion kroner to 31.64 billion.
The CEO of H&M, Karl-Johan Persson, blamed the fall on the kroner’s rise, saying that sales in local currencies were actually up by 5 percent.
Asia sales remained strong as well, but overall revenue was down due to the continued “challenging situation for the fashion retail industry.” He also blamed bad weather in some markets.
Persson pointed out that H&M opened almost 100 new stores in Q2, including its first South American location in Santiago de Chile. The brand also continues to invest heavily in online sales.
“Although many of these long-term investments have not yet generated revenues, we see them as wise and necessary – all in order to build an even stronger H&M. There is great potential in the growing online market. We are looking forward to launching our online sales in the US in August,” Persson said.
The share price was up around 1.2 percent on the Stockholm Stock Exchange.
The firm has over 2,900 stores in 48 countries. The group includes the brands COS, Monki, Weekday, and Cheap Monday & Other stores, as well as H&M and H&M Home.