Stockholm, Sweden (BBN)– Swedish fashion retailer Hennes & Mauritz (H&M)’s profit in the second quarter, ending May 31, fell 17 per cent to 5.36 billion Swedish kronor from 6.45 billion Swedish kronor in the same period last year.
“Profits in the second quarter were negatively affected mostly by higher purchasing costs due to the strengthened US dollar and by increased markdowns,” the company said on Wednesday.
H&M, which buys the bulk of its clothes in Asia including Bangladesh and Indian on US dollar contracts while selling most of them in Europe, is more exposed to the U.S. currency than Zara owner Inditex which makes more in-house, either in or near Europe.
“Profits in the second quarter have been affected by a continued negative US dollar effect, but also by increased markdowns and the costs of our long-term investments,” Karl-Johan Persson, Chief Executive Officer (CEO) of the H&M, said in a statement.
The fact that the sales increase in the quarter was below plan, naturally also had an impact on profits, the CEO added.