By Agence France-Presse
Swedish ready-to-wear giant H&M’s profits fell by less than expected from December to February, the company said Friday, sending its stock soaring.
Faced with eroding sales, the high street chain Hennes and Mauritz has pushed to catch up to competition from online retailers and is starting to reap the benefits of its efforts, it said.
“Our ongoing transformation work has contributed to stronger collections with increased full-price sales, lower markdowns and increased market shares,” H&M CEO Karl-Johan Persson said in a statement.
“Sales developed well both in stores and online in many markets, including Sweden which grew by 11 percent, the UK by eight percent, Poland by 15 percent, China by 16 percent and India by 42 percent in local currencies.”
The company’s net profit fell 41 percent to 803 million kroner ($86 million, 77 million euros) in its December-February first quarter, a better result than had been predicted.
Revenue meanwhile increased by 10 percent year-on-year to 51 billion kroner.
The results were all the more encouraging when compared to the same period in 2018, when there was a one-off tax gain of 399 million kroner.
After they were released, H&M shares surged by 14 percent to 160.9 kroner on the Stockholm exchange in early trading on Friday, erasing almost of the losses suffered in the last six months.
Analysts say H&M, which built a major presence on high streets around the world, has struggled to get its online strategy in place and so has lagged behind its peers.
In recent years H&M has also had to deal with a build-up in stock levels, forcing it into price cutting which hit profitability.
On Friday the company said markdowns decreased by 1.5 percentage points compared to the same period in 2018.