H&M blames cotton prices for lower profits
05/04/2012
Chief executive, Karl-Johan Persson, says in the report that sales increased in this first quarter of the company’s fiscal year by 13% and that the positive trend has continued into March. He adds: “Our collections have been well received, which has resulted in increased market share in a very challenging fashion retail market, and we have strengthened our position even further.”
However, Mr Persson also says that one of the ways in which H&M has gained that market share is by avoiding raising its prices to consumers. This has had a negative effect on margins because its purchasing costs have gone up. He says: “The increased purchasing costs are due partly to higher cotton prices at the time for sourcing for the quarter compared to the corresponding sourcing period the previous year.”
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