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H&M Scores Gains in Second Quarter, Sets Arket Launch

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H&MH&M is counting more on e-commerce and continues to expand beyond its flagship brand.

In a Nutshell: H&M said an important part of its strategy is to develop, launch and build new global brands. It cited COS, which will reach revenues of 10 billion Swedish krona ($1.18 billion) this year. The group’s other brands, & Other Stories, Monki, Weekday, Cheap Monday and H&M Home, are well-positioned for growth.

In the fall, the company said it will launch Arket, themed around a modern-day market, offering essential products for men, women, children and the home. The first store is set to open on Regent Street in London with the simultaneous launch of Arket’s online store in 18 European markets.

[Read more on H&M: H&M Sets Goals to Improve Working Conditions and Wages]

Earnings: Profit in the second quarter ended May 31 increased 10 percent to 7.7 billion Swedish krona ($910 million.) H&M attributed the profit increase to continued expansion and tight cost control. In the six months, profit increased 6 percent to 10.92 billion krona ($1.29 billion).

Sales: Sales in the second quarter increased 10 percent to 59.54 billion Swedish krona ($7.03 billion). H&M credited growth of the group’s online sales, which in some established markets already account for 25 percent to 30 percent of total sales. In the six months, group sales increased by 9 percent to 113.9 billion Swedish krona ($13.45 billion).

CEO’s take: Karl-Johan Persson said: “Sales in the U.K., Scandinavia and Eastern Europe, as well as in many of our growth markets, were good. However, it was more challenging in several of our major markets such as the U.S., China, the Netherlands and Switzerland. H&M’s online sales developed very well and continued to increase its share of total sales. The development of COS, & Other Stories, Monki, Weekday and H&M Home remained very strong, both in stores and online.”

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