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H&M Profit Undershoots, December Sales Lag

Swedish clothing giant Hennes & Mauritz posted fourth-quarter pretax profit short of analysts' expectations on Thursday and said its December sales in stores open more than a year fell 1 percent.

H&M reported a pretax profit of 6.2 billion crowns ($972 million) in the quarter, against analysts' average forecast of 6.6 billion in a Reuters poll and 5.4 billion in the same period the previous year.

"The financial year has been characterized by a very good sales development with well-received collections," the company said in a statement.

"This also applies for countries where the retail sector in general has been weaker. Especially pleasing is the strong sales development in Germany, H&M's largest market."

Full-year pretax profit was 19.2 billion crowns against 19.6 billion seen in a Reuters poll.

The start of H&M's new financial year has been mixed.

Gloom descended on the retail sector in the key Christmas period. In Germany, H&M's biggest market, clothing sales fell 7 percent in December. In second-largest market Britain, falling like-for-like sales at Marks & Spencer weighed on the sector and in Sweden, clothing sales were down 2.9 percent.

However, H&M said its sales up to Jan. 29 had increased 16 percent.

The company is expected by analysts to weather a turndown better than some rivals given its geographical spread and prospects in fast-growing markets.

The firm, Sweden's biggest company by market capitalization, said it would open a net 190 stores in its fiscal year, which runs from December to November, up from 177 the previous year.

It added that a long-awaited opening in Russia would happen in 2009 in Moscow and that new stores will open in Egypt, Saudi Arabia, Bahrain and Oman under a franchise agreement.

The firm's gross margin -- a key measure of cost control -- was 62.1 percent against analysts' expectations of 62.9 percent and 61.8 percent in the same quarter last year.