Why H&M Will Close Stores As It Now Favors Online Growth

H&M sales in Romania climb 17% in FY 2016

H&M said it would open 430 new stores this year, a 10 percent store growth compared with 11 percent in the past year.

For 2016/2017, H and M aims to raise its turnover from shops and online sales combined by 10 to 15 percent.

The results provide a lift for Europe's apparel retailers after a year when unseasonable weather patterns, changing consumer priorities and the strength of the dollar all provided challenges. However, for the full year ending November 30, 2016, H&M reported a net income decline of almost 11% from 2015.

"We welcomed more than 13,000 new colleagues which means there are now more than 161,000 colleagues in the group", said CEO Karl-Johan Persson. "We are very pleased that our online business developed very well for all our brands, both as regards sales and profitability".

Swedish fashion group H&M's turnover in its fiscal year 2016, which ended on 30 November, grew 7 %, but a strong dollar and an increased amount of discounts led to a lower profit compared to the year before. Its online expansion will also continue in 2017, with another 6 new markets.

Fourth-quarter gross margins of 57 percent were down on last year's 57.5 percent, though above the average estimate of 56.6 percent. On the other hand, H&M did expand a lot as well, adding 427 stores in 2016, up to 4,351 stores in 64 markets now.

The H&M group's sales including Value-Added Tax in December 2016 increased by 6 percent in local currencies compared to the same month the previous year. H&M declared an unchanged dividend of 9.75 kronor a share. Converted into SEK the increase was 10 percent. Kazakhstan, Colombia, Iceland, Vietnam and Georgia are planned to become new H&M markets. H&M's sales in Poland, which are more than double compared to those in Romania, went up by 8% past year.

H&M said on Tuesday it would roll out e-commerce in six more markets this year, taking it online in 41 of 69 markets at year end.

H&M has branched into seven separate concepts in recent years to broaden its customer base in the face of tougher competition in the budget segment, and plans to launch one or two more this year, but around nine of 10 stores are still its main budget brand H&M.

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