The Hennes and Mauritz AB (H&M) has predicted higher earnings this fiscal year. The company said in view of the ongoing shift in the industry and the H&M group’s ongoing transition work, 2018 is expected to remain challenging but there are good opportunities for a somewhat better result for the full year compared with the previous year.H&M’s sales in comparable stores are expected to remain negative with a gradual improvement during the year. A tough start with high opening stock levels from Q4 2017 and imbalances in the product range, the company added, are resulting in high markdown costs, with a negative effect on earnings at the start of the year. However, the online and new business sales are expected to increase by at least 25 percent and sales in newly opened stores are expected to add approximately 4 percent to group sales in 2018.
Sales of new business, that includes the company’s newer brands COS, Weekday, Cheap Monday, Monki, H&M Home, & Other Stories and Arket, amounted to 17 billion Swedish krona (2.1 billion dollars), 7 percent of the H&M group’s total sales. The company added that newly opened stores have very good terms and flexibility and the average payback period for new stores is less than 17 months.
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