Swedish clothing retailer H&M’s pre-tax profits fell by 61% to 1.26bn Skr (£108m) in the first quarter ending 28 February, following weak sales in the previous months.
In order to reduce the $4.3bn of unsold clothes, H&M plans to reduce the prices and slow its expansion in stores.
H&M CEO Karl-Johan Persson said: “Weak sales in the fourth quarter, partly caused by imbalances in the assortment for the H&M brand, resulted in the need for substantial clearance sales in the first quarter.
“The high level of clearance sales combined with unusually cold winter weather had a negative impact on the sales of the spring garments. In the first quarter, the H&M group’s sales were unchanged in local currencies.
“Our assessment remains that sales for online and New Business will grow by more than 25 percent during the year, and that the H&M group will achieve a somewhat better result for full-year 2018 compared with the previous year. We take a long-term view that together with our knowledge and experience enable us to navigate through times such as this.”
The company also plans to open 220 new shops this year, most of which will be H&M stores, including 45 stores with H&M home range products and eight standalone H&M home stores.
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H&M currently has more than 4,700 stores worldwide, and employs about 171,000 people. H&M also owns the clothing brands Cos, Monki and & Other Stories.