Retailer H&M has revealed weaker-than-expected sales as it was impacted by recent store closures.
The Swedish fashion giant also posted a drop in profits for the latest quarter, driven by higher markdowns and heavy investments to win over customers.
H&M revealed on Thursday that net sales were up 2% to 55.3 billion over the three months to February 28, compared with the previous year.
It added that this slowed down to 1% this month amid continued pressure on consumer finances.
Sales growth was also knocked by H&M’s plans to trim its store estate and help simplify its operations over the past year.
H&M said it had 40 net store closures over the quarter, including 35 for the eponymous H&M brand while it also closed five Monki shops.
Its recent store overhaul left the retailer with 4,213 stores at the end of last month – a reduction of 125 over the past year.
The group, which also owns the Cos and & Other Stories brands, reported that gross profit for the quarter dipped slightly to £27.2 billion from £27.7 billion.
Daniel Erver, chief executive of the business, said: “Profitability in the quarter was negatively impacted by a weaker gross margin, which in turn was affected by negative external factors, increased markdowns and investments in the customer offering.
“We estimate that the overall negative effect of these will already be significantly smaller in the second quarter than in the first quarter.
“Although we have made important progress in our plan and have good cost control, our sales and earnings in the quarter were somewhat weaker than planned – but the first quarter is the smallest quarter of the year for us in terms of sales and margin, and we are confident going forward.”
The boss added that moves to improve its assortment of female clothing were “starting to have a positive effect” in the latest quarter.
