Meanwhile H&M has been busy buying up sites across the eurozone and beyond. Despite reporting disappointing profits in the third quarter – pretax profits stand at $740m compared to the forecasted $810m – the Swedish fashion chain is pushing on with its growth plans. It will open 300 new stores by November this year, up from the 275 forecast, and is launching an upmarket clothing range: & Other Stories. This, despite the consumer downturn and recession in the eurozone.
This is a pretty ballsy strategy. The only concession that the group is making to the current economic turmoil is to shelve its plans to launch an online store over in the US until mid-2013. And make no mistake the retailer is suffering due to its exposure to multiple currencies: while the euro continues to weaken, the dollar and Swedish kroner are gaining in strength, complicating transactions across the board. H&M reckons currency effects have cost it 200m kroner more in the third quarter of this year than it had in the same period of 2011.
Still, M&S and H&M may have the right idea. M&S could make a mint out of the current anti-bank sentiment in the wake of Libor-rigging and the PPI scandal. And if latest CBI data is to be believed, H&M could be making a preemptive move to cash in on a high street upturn. The latest CBI distributive trades survey shows that 33% of retailers saw sales rise year-on-year in the first fortnight of September, against 27% reporting that sales declined, giving a balance of 6%. That’s up from -3% the previous month.
Nothing ventured, nothing gained, as they say. MT will be watching both M&S and H&M with interest over the coming months...