Sweden's H&M disappointed investors with a 10 percent tumble in quarterly profit, the world's second largest fashion retailer blaming investment aimed at boosting its online business for the decline.
Profit fell for the third straight year in 2018 because of competition from the likes of Zara, Primark and ASOS and as the shift to online shopping hit trading at its core budget stores.
“It has been a challenging year for H&M group and the industry but after a difficult first half, there are signs the company's transformation efforts are beginning to take effect,” CEO Karl-Johan Persson said in a statement.
H&M has invested heavily in logistics and digital technology and is reviewing its mix of stores and brands, while also working on a new H&M store concept. H&M spent around 450 million Swedish crowns on logistics and technology in the last three months of its financial year, including resolving problems it flagged earlier in 2018 and switching to a new online platform in its biggest market Germany.
“H&M's investments in its offer are more than the market anticipated and may disappoint those looking for signs of margin normalisation,” said RBC Europe analyst Richard Chamberlain.
Shares in the Swedish company were down 1.7 percent after pretax profit for September-November shrank for the sixth straight quarter to 4.4 billion crowns ($482 million).