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H&M to Open 425 New Stores in 2016

Retail’s turbulence has nothing on H&M, it seems. The Swedish fast fashion purveyor saw sales up globally for the fiscal year and plans to open a slew of stores in 2016—425 to be exact.

In a market where many brands and retailers are battling to keep from closing stores, 425 is no small number.

“We operate in an industry that is exposed to a lot of competition and are therefore constantly working to develop our customer offering within our different brands which are all based on the idea of giving customers the best combination of fashion, quality, price and sustainability,” company CEO Karl-Johan Persson said in a statement Thursday.

And that offering seems to be resonating well with the consumer.

H&M’s sales for the full year from Dec. 1 2014 to Nov. 30, 2015, were up 19 percent to 180.9 billion Swedish kronor ($21.3 billion). Post-tax profit increased to 20.9 billion kronor ($2.5 billion), which according to Persson, is the company’s highest result to date, and “This despite the fact that the strong U.S. dollar exchange rate has made our purchasing much more expensive,” he added. Gross margins, however, did dip for the full year, falling to 57 percent from 58.8%.

For the fourth quarter ended Nov. 30, sales were up 14 percent to 48.7 billion kronor ($5.7 billion) from 42.6 billion kronor the year prior. Margins took a hit in the fourth quarter too, to 57.5% down from 60.4%.

The retailer opened 413 new stores for the fiscal year and 10 new online markets, bringing its year-end counts to 3,924 stores in 61 markets and 23 e-markets.

“2015 has been a very expansive year for the H&M group,” Persson said, and the company is on track with its goal of increasing store count by 10-15 percent per year.

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Of the 425 store openings slated for 2016, three will be in new markets, including New Zealand, Cyprus and Puerto Rico, and H&M will offer e-commerce in nine markets where it already has stores, including Ireland, Japan, Greece, Croatia, Slovenia, Estonia, Latvia, Lithuania and Luxembourg.

Persson said H&M is pleased with its strengthening online offering and the company will make substantial long-term investments to “grasp opportunities coming from the increased digitalization,” though further details were not disclosed.

The company will continue its sustainability efforts, building on 2015 milestones like switching to 100 percent renewable energy in all markets where possible and increasing the proportion of cotton coming from sustainable sources to 31 percent, up from 21 percent last year. The goal is to source all cotton for H&M products from sustainable sources by 2020 “at the latest,” according to the company.

“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 strengthen H&M’s position even further in 2016,” Persson said.