H&M Warns Discounts Hurt Profit


H&M warned of further price cuts to shed unsold clothes after the fashion retailer reported a 61 percent dive in first-quarter profit that knocked its shares lower.

The Swedish retailer has been forced into more discounting after seeing a bigger-than-expected 7 percent increase in inventories.

Sales have slowed in recent years, dropping share prices, mainly due to shoppers moving online.

However, company said online sales rose by approximately 20 percent.

Markdowns in the second half of the year are likely to be lower compared to year-before levels.

Chief Executive Karl-Johan Persson said, “we accelerate our transformation so that we can take advantage of the opportunities generated by rapid digitalization.”

H&M stands by its full-year strategy for sales growth as its newer add-on brands and online sales net better results.