H&M’s pre-tax profits dropped by 61% the three-month period ending 28 February 2018 compared with the same period the previous year.
The Swedish retailer’s profits fell by 1.26bn Swedish crowns (£108.24m), slightly short of the 1.29bn analysts expected. Shares fell by 5% in early trading, putting it at its lowest level since 2008.
Chief executive Karl-Johan Persson described the start of 2018 as “tough” for the retailer but said it would “take advantage of the opportunities generated by rapid digitalisation”.
Persson said: “Weak sales in the fourth quarter, partly caused by imbalances in the assortment for the H&M brand, resulted in the need for substantial clearance sales in the first quarter. The high level of clearance sales combined with unusually cold winter weather had a negative impact on the sales of the spring garments. In the first quarter the H&M group’s sales were unchanged in local currencies.
“Many of our ongoing initiatives are giving good indications and results, even though they have not yet been implemented at a large enough scale to have a decisive effect on the overall results. The weak sales development combined with substantial markdowns had a significant negative impact on results in the first quarter.”