H&M eComm warehouse investment dents profits
Three new fulfilment centres with a total logistics area of around 230,000 square metres were opened during the 1 September 2018 — 30 November 2018 period, providing increased capacity – particularly for online sales.
The result was negatively affected by costs generated in connection with the earlier replacement of logistics systems, but also by activities in preparation for upcoming transitions. Together with negative year-end effects these costs amounted to approximately SEK 560m in the quarter.
The new fulfilment centres means H&M can offer customers faster deliveries and a wider assortment while reducing the capacity constraints that slowed it down in some markets in 2018.
The retailer says online and physical stores are being increasingly integrated.
The H&M group’s net sales increased by 5% to SEK 210,400m in the latest financial year.
Karl-Johan Persson, CEO said: “Performance was driven by more full-price sales and lower markdowns in the fourth quarter. While inventory levels were up year-on-year, levels and composition improved sequentially from the third to the fourth quarter. With the ongoing improvements in buying and logistics, we expect this trend to continue. Therefore, markdowns are expected to be approximately 1 percentage point lower in the first quarter 2019 compared to the corresponding quarter last year.”
