Fashion retailer Hennes & Mauritz (ST:HMb) (H&M) has reported a third-quarter net profit of 3.33 billion SEK ($302.9 million), surpassing expectations as a result of its emphasis on profitability and inventory efficiency, as reported on Wednesday. The Swedish company's focus on cost and efficiency has led to the initiation of a program aimed at saving an annual SEK2 billion.
Despite the delay in the autumn season due to unseasonably warm European weather, which is projected to result in a 10% decline in September sales, H&M is forging ahead with its cost-saving measures. These include the reduction of approximately 1,500 global jobs and a significant investment in its online store following its exit from Russia.
The company has also undertaken a restructuring of its physical presence, opening 66 new stores while closing 156 others. A significant portion of these closures, totalling 175 stores, were located in Russia and Belarus.
CEO Helena Helmersson reaffirmed the company's target of achieving a 10% operating margin by 2024. In the third quarter, H&M achieved a margin of 7.8%, indicating progress towards this goal. Concurrently, the company has initiated a SEK3 billion buyback.
This strategic shift towards profitability and inventory efficiency appears to be paying off for H&M, as demonstrated by their unexpected third-quarter net profit. Despite challenges such as the delayed autumn season and changes in their physical and digital presence, the company continues to navigate towards its financial targets.
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