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H&M targets expansion in SA

While Hennes & Mauritz (H&M) may have delivered an impressive full-year performance in SA amid a constrained consumer environment, the Swedish company's group results show that global retail is struggling as much as the local sector.

By Colleen Goko

2 Feb 2017

©jewhyte via 123RF

H&M reported South African sales of about R1bn last year from its fewer than 10 stores. In the fourth quarter of its 2016 financial year, H&M local sales grew by 111% in rand terms. H&M opened its doors in SAin 2015.

"We had another fantastic festive season in SA and our customers seem to like what we offer – fashion and quality at the best price in a sustainable way," said H&M SA communications manager Amelia-May Woudstra. "We currently have nine stores in SA with five in Gauteng and are planning on expanding our offering throughout SA.

"We see a lot of potential in the South African market and have an aggressive expansion strategy in place. We will be opening another two stores in Nelspruit at the Ilanga Mall and in Polokwane at the Mall of the North," said Woudstra.

For the year ended November 2016, H&M's group net income fell 11% as a result of increased markdowns during the year and a stronger dollar that made purchasing costs higher. Group sales rose 6%, not unlike the low sales growth figures posted by local retailers.

The world's second-largest fast-fashion clothing retailer also revealed that it would be scaling back on its global expansion efforts. The prior target was to increase the number of stores by 10%-15% annually.

H&M's presence extends to 64 markets worldwide, of which 35 have online platforms.

Amsterdam-based retail analyst Ansumana Konneh, with investment group FDA, said H&M's margins were hurt by the discounts as the company had to clear surplus inventories.

Source: Business Day

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