• H&M’s pre-tax profit fell to £850.8m
  • Sales increased 5% over the period to £8.62bn
  • Sales in the UK as well as Germany, the retailer’s biggest market, both reported declines

H&M profits continued to fall in its first-half despite increased sales as unseasonable weather and volatility of the US dollar hurt results.

The fashion retailer said pre-tax profits fell to Skr10.3bn (£850.8m) in the year to May 31 from Skr13.5bn (£1.08bn) over the same period last year.

H&M blamed the slump in profits to the continued strength of the US dollar, which had led to a spike in purchasing costs from suppliers.

The retailer also said that unseasonable weather in March and April had led to increased markdowns of products, hurting profits overall.

H&M’s chief executive Karl-Johan Persson said: “Profits in the second quarter have been affected by a continued negative US dollar effect, but also by increased markdowns and the costs of our long-term investments.

“The fact that the sales increase in the quarter was below plan, naturally also had an impact on profits.

“It has been a challenging half-year for fashion retail in many markets, but we have great confidence going forward and are continuing to develop our offering further within all our brands.”

Speaking to Retail Week, head of investor relations Nils Vinge, said the UK remained a very important market for the group. ”We are strong in terms of bricks-and-mortar and ecommerce, and we still feel we have the potential to grow further. We are looking into testing [new technology], it’s not just about click-and-collect. It’s the combined effect of many different things. We have changed distribution from Swedemn to the UK and that has helped customer experience, it’s helped with lead times.”

Asked whether H&M was concerned over research indicating that millennials were becoming more interested in experiences over buying clothes, Vinge replied: ”I agree that the share of the wallet for all of fashion is lower today than in the past, with consumers having other things they want to do. Nevertheless, there’s still oportunity for us to take a bigger part of the fashion market by being even more interesting and make sure we’re the first choice [for fashion] amongst consumers.”

Sales for the fashion retailer increased overall to Skr104.6bn (£8.2bn) driven by a 9% rise in sales in the US, the retailer’s second biggest market. By contrast, sales in Germany, the retailer’s biggest market, fell marginally over the period, while UK sales fell 3%.

H&M currently operates 4,077 stores worldwide and plans to launch 425 new stores over the course of the financial year.

The Swedish fashion giant also launched ecommerce websites in nine more countries during its second quarter, including Japan and Greece, and plans to launch 11 more transactional sites by year-end, taking its total up to 34.

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