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HomeNEWSH&M profit drops 34 percent

H&M profit drops 34 percent

Overseas H&M reports a 34 percent drop in fourth-quarter profit. The chain has plans to close stores as stock slides to a nine-year low.

Overseas H&M reports a 34 percent drop in fourth-quarter profit. The chain has plans to close stores as stock slides to a nine-year low. 

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Bloomberg reported today that Swedish fashion chain H&M is to close 107 stores as well as adding a cheaper line called Afound into its business model. The first Afound store will be in Stockholm, and the site will go online in Sweden this year. With Afound, H&M is building a format where it can funnel off excess inventory.

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The world’s second-largest clothing retailer said it would invest more in online sales and digital inventory-tracking technology, while adding shops in markets that are still growing.

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H&M’s shares fell as much as 9.1 percent to a nine-year low Wednesday in Stockholm. They have lost more than a quarter of their value in the past three months.

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H&M’s operating profit fell 14 percent to 20.6 billion kronor in the 12 months through November, the biggest drop in six years.

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The company has struggled to cut inventory, which ended the year higher than planned, and H&M said it will increase markdowns by as much as 2 percent in the first quarter to clear that out.

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Despite the drop, the company still plans to open 390 new stores, with a quarter of those being side-chains other than the flagship H&M, such as COS, Monki and Afound. 
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rnH&M has been in hot water already in 2018, with the company losing celebrity collaborator The Weeknd over a racially insensitive hoodie that drew backlash and calls for boycotts of the chain.

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