Dive Brief:
- Hennes & Mauritz AB reported Tuesday a profit upswing during its first quarter that beat estimates, with pretax profit up 34.3%.
- Sales grew 25% in the quarter ending at the end of February. But H&M warned that second quarter sales wouldn't be as stellar, with sales in the first three weeks of March up 9% compared to a 15% growth in February. H&M said that with this trajectory, the retailer will most likely see its weakest monthly performance since September.
- H&M CEO Karl-Johan Persson also warned in a release that the strong U.S. dollar will have a negative impact on its sourcing costs, particularly in the second half of the year.
Dive Insight:
While H&M seems to have entered 2015 with a bang, its momentum is slowing down a bit in March, perhaps due to prolonged winter weather in some of its markets. The fast-fashion mogul will continue to grow this year though, with plans to open 400 new stores and enter nine new online markets in the 2014-2015 financial year. H&M also announced that it will expand its product assortments in some hot fashion categories like sportswear.
"The year has got off to a very good start and we have great faith in our offering," said CEO Karl-Johan Persson. "Although the strong US dollar will affect our sourcing costs going forward, we will make sure that we always have the best customer offering in each individual market.”
H&M isn't the only retailer struggling due to the strong dollar—last week, Tiffany's forecasted a decline in sales as the strong dollar reduces the value of out-of-country sales and deters some tourists from its jewelry store in New York.