Swedish fashion chain H&M has beaten quarterly profit forecasts after improving its ability to control costs as it expands across the globe. But, as Sonia Legg reports, the world's second biggest fashion retailer said many major markets remain challenging.
There haven't been many ups in recent years for the world's second biggest fashion retailer. So news that Sweden's H&M beat quarterly profit forecasts gave their shares a rare lift. For the past two years they've been on a downward slope - the near three per cent boost in morning trade took the year-to-date fall to 17 percent. Expansion across the globe and better cost controls helped pretax-profit in the March-to-May period grow by 10 percent from a year earlier to more than $900 million. It was far better than analysts expected but the Swedish giant warned of challenges ahead in many major markets - including China and the U.S. Low sales and high inventories also meant it had to step up price markdowns. And it's still finding competition from new online retailers like ASOS and Zalando tough. Big IT investments to help it compete have been made as have moves to speed up the supply chain to get designs to consumers more quickly. That's where larger rival Inditex - owner of Zara - has scored in recent years. It saw an 18 percent profit rise in the same quarter. H&M's fight back includes a new higher price brand. It's also opening its first stores in Uruguay and Ukraine, and going online in the Philippines, Cyprus and India