The emperor’s new clothes

Perpetual development

The company’s 2014 plan involves the opening of 375 stores of the H&M brand across the world. Summarising the first nine months of this year, Karl-Johan Persson, the president of the board of H&M, underlines this approach and points to more exotic markets as the direction for further expansion. “Our expansion plan for 2014 remains unchanged. In the summer we opened another flagship store on 5th Avenue in New York. A new H&M boutique is to be opened in the Philippines in October, but the Indian debut of the brand, which was supposed to take place in autumn, has been postponed until 2015. Next year we are planning to open shops in South Africa, Peru, Taiwan and Macau,” reveals Mr Persson. But the company is not only investing in territorial development, it is also launching new product subgroups to extend the H&M offer. The H&M Home concept was introduced to Poland last year. In the meantime, the company has also been developing its H&M Sport line, which is available in its regular stores. At the end of September the total number of the company’s outlets globally amounted to 3,388 – 382 more than in the same period last year. Apart from the H&M brand itself, the company has a number of others under its umbrella: COS, Monki, Weekday, Cheap Monday and its & Other Stories and insists that it is also thinking about developing these brands further. COS is to be launched in Australia, Portugal, Switzerland, Japan and the United States, where an online shop of the brand is also to be set up. New & Other Stories stores will be opened in Belgium and the Netherlands. Meanwhile, online sales of & Other Stories will begin in  Ireland, Austria and the US. The plans suggest that H&M is now fully embracing the potential of internet commerce. Virtual shops are to be launched on around 8–10 markets in 2015, but Polish customers will be unable to use such services for the time being.

Slice of the Polish pie

In Poland H&M has been thriving for some time now and has managed to achieve anchor tenant status in many malls. In 2013, 17 new stores of the brand opened in Polish shopping centres. Since the beginning of this year 16 have started operating and the list of locations where future openings are planned continues to grow. The managers involved in the development of the brand have recently decided that stores will be opened in four shopping centres nearing completion, under construction or planned to be built. The first one to be opened will be an outlet in the Sonata Park retail park in Sochaczew, which is owned by Carrefour Polska. The tenant will occupy an area of 1,500 sqm this autumn in its debut in the town, just west of Warsaw. Sochaczew has a population of 40,000, just like Sieradz, where an H&M store has been operating in the local Dekada centre since 2011. Meanwhile, the opening of Tarasy Zamkowe – a Lublin shopping centre where an H&M store is also to be opened – is planned for 2015. “The presence of H&M in Tarasy Zamkowe is a response to the needs of our future customers. The boutique will be furnished in line with the latest trends with the goods available on two floors with an area of nearly 2,000 sqm,” says Eduard Zehetner, the president of the board of Immofinanz Group, the investor behind the development. There are also plans to open the company’s first outlet in Galeria Aviator in Mielec. Rank Progress, which is now preparing for the construction of the mall, has signed a lease with H&M for an area of 1,700 sqm. The Swedish brand will also occupy 2,600 sqm in GTC’s Galeria Wilanów, which is under development in Warsaw.

Fuelled by funds

Growth on such a scale would be impossible without thefinance to fuel it. These funds, however, would be unavailable without high sales levels, which in the case of H&M have continued to grow. Over the first nine months of the business year starting December 1st 2013, the Swedish chain registered an increase in sales to SEK 108.8 bln (EUR 11.7 bln) excluding VAT, which constitutes a growth of 18 pct. H&M’s profit after tax increased to SEK 13.7 bln (app. EUR 1.5 bln), i.e. SEK 8.31 per share. “The company’s market share was able to increase thanks to the considerable growth in the sales of all the brands. This is proof for us that our collections have been welcomed by customers. Combined with the firm’s expansion, this has enabled us to increase sales expressed in Swedish crowns by 21 pct in Q3 of this year. Furthermore, a solid growth in profits and an increase in operating profit of 20 pct was also recorded. At the same time we in a very intensive investment stage aimed at building an even stronger H&M company,” declares Karl-Johan Persson.