H&M Expands in Eastern Europe

The Swedish fashion giant has opened stores in Moscow and Kazakhstan and will soon do so it in Georgia.

Abel Amón. 09/06/2017

The presentation of H&M‘s first quarter results has been worst than expected. Although there is a slight improvement in turnover, 7% to reach SEK 54 369 million (about EUR 5.5 billion), this has been a lower than expected. The operating margin also improved from 52 to 52.1 %, but the company has not been able to adequately control its sales and administration costs, so the net profit has been reduced by 3.4% to EUR 250 million, which means that earnings per share have passed from 1.54 SEK in 2016 to 1.48 in 2017. We agree with some analysts that the company should focus, rather than expand its stores, on improving sales and management of existing ones.

H&M store

The most important markets at the moment for H&M are Germany, the United States and the United Kingdom, which account for a third of all sales of the group. Of the 42 new net establishments opened by H&M a large percentage has been in the US (17 openings and a closing) and China (13 openings and a closing), which are the countries where the company has increased its presence the most. In Spain, turnover in the quarter was close to EUR 200 million, very similar to that of the first quarter of 2016. The number of stores in our country remains stable, around 170 shops.

H&M opening in Kazakhstan (Image courtesy of H&M)

Opening in Kazakhstan
Despite the aforementioned importance of sales in developed countries, the company is firmly committed to emerging markets. In fact, they just have opened a store in Kazakhstan. Saed El-Achkar, Country Manager of H&M Russia and Kazakhstan is really excited about the project: «We are very pleased to see so many H&M fans in Kazakhstan. We are sure that we will meet all expectations. Residents of Almaty (its main city) with the possibility of always being elegant following the trends of world fashion at a good price». This H&M store consists of two floors for a size of more than 3,000 square meters in the MEGA Alma Mall -Ata.

H&M opening in Moscow (Image courtesy of H&M)

Flagship in Moscow
In Moscow, the largest flagship store of the Swedish brand in Russia was opened on Tverskaya Street, the central artery of the Russian capital and occupying three floors with a total area of ​​almost 5,000 square meters. The range of products that it presents includes all the brand line: women’s fashion, men’s and children’s, Divided (fashion for youngsters) Denim Jeans Collection, Basic, as well as the line of sportswear H&M Sport. Also the store presents shoes, accessories and jewelry, H & M beauty cosmetics line and H&M Home products. In addition, H&M will open its first store in Georgia in Tbilisi, its capital.

Disclosure: The Luxonomist is not responsible for the views expressed in the article. The text has been written freely expressing their own ideas, without receiving any compensation. The author has no business relationship with any of the companies whose shares are listed in this article.

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