Swedish retailer H&M has reported a net profit growth of 6 percent to SKr 4.3 billion (£319 million) for the fourth quarter. The increase of 6 percent from the same period the previous year before fell far below market expectations of 13 percent. Turnover for the quarter was up 13 percent to SKr 18 billion. The retail chain said that weaker sales at the beginning of the fourth quarter had resulted in increased funding for marketing purposes. It also said that the reintroduction of textile quotas for China had caused the cost of products sold to rise compared with the other quarters. The group did point out that its gross margin of 60 percent had been “very satisfactory”.

With 1200 outlets, the retailer now plans to focus its expansion in the US , Spain , Germany and the UK this year. The competition in these countries is considerable, with Spanish Inditex – owner of chains like Zara and Berschka – proving a formidable competitor. H&M also said that it is planning extensive online and catalogue expansion and would start franchise operations in the Middle East . The first stores in Kuwait and Dubai are due to open in autumn 2006. Last year, H&M opened 145 stores, 23 of which in German where the poor economy is proving quite difficult. Meanwhile full-year turnover amounted to SKr 61.2 billion, up 14 percent from last year.

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