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Cheap dollar helps H&M profits

Megan Williams Mar 27, 2008


Doug Krizner: Markets across Europe have edged higher,
thanks in part to some good earnings from Europe’s second-largest clothing retailer.
Megan Williams has the story on H&M.

Megan Williams: While retailers struggle worldwide, Europe’s second-biggest clothing chain is as strong as ever. In this year’s first quarter, H&M’s profits rose by a whopping 28 percent.

It’s not just celebrity reps, like Madonna and Kylie Minogue, who have kept profits up. H&M buys most of its clothes from Asia, where they’re priced in dollars. That makes them a lot cheaper. This has offset losses in dollar sales in U.S. stores and increased profits in the Eurozone.

Michael Skou: These figures are fabulous.

Michael Skou of Retail Institute Scandinavia says H&M’s formula of testing the popularity of items through catalog sales before deciding what to sell in stores also boosts sales.

Skou: They can sell more than 80 percent of their products to a full price. And you won’t find a lot of retailers managing that.

Growth is likely to continue. H&M plans to open almost 200 new stores this year alone, stepping into Japan and Saudi Arabia for the first time.

I’m Megan Williams for Marketplace.

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