Sweden’s largest purveyor of fast fashion has no intention of slowing its roll.
There was a lot of good news highlighted Wednesday in The H&M Group’s annual report for fiscal 2015. Sales including VAT increased 19 percent in the 12 months ended Nov. 30 to 209.9 billion Swedish kronor (roughly $28.5 billion) and operating profit was 26.9 billion Swedish kroner ($3.3 billion)—its highest result to date, despite a strong U.S. dollar which made purchasing considerably more expensive.
CEO Karl-Johan Persson said that sales “developed well” across all of the group’s brands, including H&M, H&M Home, Cos, & Other Stories, Monki, Weekday and Cheap Monday, helped in part by the 413 new stores that opened throughout the year, mostly in China (83) and the U.S. (59).
425 new stores on the way in 2016
The retailer now operates 3,924 locations in 61 markets (including Taiwan, Peru, Macau, India and South Africa, which were added in 2015) and plans to ramp up its number of store openings by 10 to 15 percent annually. For 2016, that will mean around 425 new stores, mostly in existing markets. But the retailer will also enter New Zealand, Cyprus and Puerto Rico for the first time, to bring the total number of markets H&M has a presence in to 64.
The report noted that H&M’s 4,000th location will open this spring, meaning the chain’s store count has doubled in six years.
In addition to brick-and-mortar openings, e-commerce will be offered in nine more of its namesake brand’s existing markets: Ireland, Japan, Greece, Croatia, Slovenia, Estonia, Latvia, Lithuania and Luxembourg. By the end of the year, customers in 32 countries will be able to shop the brand online.
“The main focus of expansion in 2016 will be on Cos, which is now a globally established fashion brand with more than 150 stores in 30 countries,” Persson continued, noting that new markets for the higher priced brand will include the Czech Republic, Romania, Latvia, Malaysia and Saudi Arabia (via franchise). “Also pleasing is the fact that our latest addition, & Other Stories, continues to be well received.”
Greenhouse gas emissions more than halved last year
Sustainability played a big part in the report, too, and the group lauded its ability to cut greenhouse gas emissions by a further 56 percent throughout the year, noting that 78 percent of all electricity used in its own operations globally (stores, offices, distribution centers) was 78 percent, up from 27 percent in 2014.
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“Buying and selling globally means it is also important that the clothes are transported in a responsible way. Efficient logistics flows are essential and the least-polluting method of transport must be used,” the report said. “In 2015 a total of 90 percent of the group’s products were carried from suppliers to the distribution centers by rail or waterway.”
Also notable: 31 percent of cotton used last year was from sustainable sources (meaning either organic cotton, recycled cotton or cotton grown under the Better Cotton Initiative), up from the prior year’s 21 percent. Plus, more than 12,000 tons of clothing was collected in 2015 as part of H&M’s in-store Garment Collecting initiative.
Poor working conditions and low wages are public-relations problems that plague fast-fashion retailers and H&M—which doesn’t own any factories but contracts around 820 independent suppliers mainly in Asia and Europe—has been working to regulate both.
In 2015, its Fair Wage method was implemented at 68 of those factories, with a goal to have all of the retailer’s strategic suppliers—which account for around 60 percent of total production—to have functioning wage structures in place by 2018. Meanwhile, the company’s Code of Ethics, which was adopted in 2003, does not allow bribes or “facilitation payments.” Thirty-three suspected violations were investigated in 2015, leading to action being taken in 25 cases.
Persson concluded, “For 2016 we see many opportunities, but are also well aware of the challenges that exist. We firmly believe that our customer offering and our investments will lead to increased market share, and will strengthen our position even further during the year.”