HELSINKI (AP) — Swedish low-cost fashion brand Hennes & Mauritz AB said Thursday its first quarter sales disappointed, causing a plunge in the company's share price, as customers increasingly shop online.
Net sales during the December-February period grew 7 percent to about 47 billion kronor. Net profit dipped to 2.46 billion kronor ($278 million) from 2.54 billion kronor a year earlier, partly because of higher mark-downs.
The share price plunged more than 13 percent to 223.9 kronor ($25.27) in mid-day trading in Stockholm.
H&M CEO Karl-Johan Persson described the sales growth as "below our plan."
The fashion retail industry in general was "very tough in many of our large markets" and "this was reflected in our sales," Persson said.
He added that it was "a challenging period of change in which customers' shopping behavior and expectations are changing at a fast pace as a result of growing digitalization. This is an accelerating development which also brings great opportunities."
The H&M brand is the group's largest in 65 markets. It also owns six others: COS, & Other Stories, Monki, Weekday, Cheap Monday and H&M Home. The group will soon launch a new brand, Arket, that will have "a broad yet selected range of essentials for men, women and children, as well as a smaller, curated assortment for the home," he said.
"The overall direction and focus is quality in simple, timeless and functional designs," he said.
The first Arket store will open in London and online in 18 European markets in early autumn 2017, followed by shops in Brussels, Copenhagen and Munich.