Fast fashion retail giant H&M has brushed off a “challenging environment” to deliver a jump in annual earnings, but revealed a recent sales slowdown amid subdued shopper demand over Christmas.
The group reported a 6% rise in operating profits of 18.4 billion Swedish krona (£1.5 billion) for the year to November 30, thanks to a 38% surge in its final quarter as it benefited from strong Black Friday trading.
Sales in local currencies rose 2% over the year and across its fourth quarter.
But it cautioned that it expects net sales in local currencies to drop 2% year-on-year in the two months to the end of January.
It said the decline “should be seen in the light of strong sales during the Black Friday week at the end of November, which led to subdued demand in a number of markets in December”.
The group added there is also set to be a knock to sales in February due to a “negative calendar effect associated with the Chinese new year”.
It added: “The company is closely monitoring developments in global trade and trade restrictions.
“With good flexibility in the supply chain and through the pricing of the customer offering, there are opportunities to adapt the business to changed conditions.”
H&M said it ended its financial year with 4% fewer stores, at 4,101, while its global workforce shrunk by nearly 2% to 94,744.
Chief executive Daniel Erver said: “Through a strengthened customer offering, good cost control and improved inventory productivity, we continue to take important steps towards all our long-term targets in a challenging environment.”
The start of the new year has been marked by continued geopolitical and economic uncertainty, which underlines the importance of an efficient organisation with short decision paths that operates close to the customer and has a high degree of flexibility and continued good cost control, he added.