Swedish fashion retailer Hennes & Mauritz AB has stated that it's increasing markdowns this quarter after accumulating a record pile of unsold garments worth more than $4 billion. Operating profit fell 62 per cent to the lowest level in more than a decade as clearance sales failed to reduce quantities of T-shirts and jeans that customers had passed over.
H&M's already-downbeat forecast for the start of 2018 was exacerbated by unseasonably warm European weather in January followed by February's cold snap, whipsawing the clothing retail industry. That forced the company to slash prices even more. CEO Karl-Johan Persson stated the company made mistakes by narrowing its assortment last year, though he expects sales to improve in the second half.
He further adds that H&M plans to reduce markdowns in the second half, when sales should improve and a weaker dollar will reduce garment costs.
