Cheap dollar helps H&M profits
H&M, Europe's second-largest clothing store chain, enjoyed a healthy rise in profits in the first quarter. Megan Williams reports how the cheap dollar is helping the retailer and why growth will likely continue.
Outside the H&M store at London's Oxford Circus (Gareth Cattermole/Getty Images)
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Doug Krizner: Markets across Europe have edged higher, thanks in part to some good earnings from Europe's second-largest clothing retailer. Megan Williams has the story on H&M.
Megan Williams: While retailers struggle worldwide, Europe's second-biggest clothing chain is as strong as ever. In this year's first quarter, H&M's profits rose by a whopping 28 percent.
It's not just celebrity reps, like Madonna and Kylie Minogue, who have kept profits up. H&M buys most of its clothes from Asia, where they're priced in dollars. That makes them a lot cheaper. This has offset losses in dollar sales in U.S. stores and increased profits in the Eurozone.
Michael Skou: These figures are fabulous.
Michael Skou of Retail Institute Scandinavia says H&M's formula of testing the popularity of items through catalog sales before deciding what to sell in stores also boosts sales.
Skou: They can sell more than 80 percent of their products to a full price. And you won't find a lot of retailers managing that.
Growth is likely to continue. H&M plans to open almost 200 new stores this year alone, stepping into Japan and Saudi Arabia for the first time.
I'm Megan Williams for Marketplace.
