H&M to raise prices after profit lags expectations

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H&M says it expects to raise prices this year after its profits for December to February period fell short of expectations.

"Sales and profits for the quarter were impacted by the negative effects of the pandemic in many of the group's major markets," the company told Reuters in a statement, citing lingering supply chain issues and a new wave of COVID-19. 

FILE: The H&M logo is seen on one of the Swedish retailer’s shops. (Reuters/Ints Kalnins)

The company reportedly swung to a pretax profit of around $30.5 million in its first-quarter from a roughly $149 million loss a year earlier when the pandemic forced almost half of its stores to shut down. 

The results were far below the roughly $266 million profit reached in the pre-pandemic first quarter of 2020, Reuters reported. 

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The company told the outlet that increased technology and supply chain-related investments also weighed on lagging profit margins. 

Washington DC: Inside Union Station in capital city with the H&M visible in the background.  (iStock)

"Looking at inflation it's primarily raw material and transportation costs that affect us and we see, as do many others, that we need to adjust our prices," CEO Helena Helmersson told Reuters. "We'll raise different product types in different countries depending on competition and demand."

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Helmersson said the plan was for price hikes to still be smaller than H&M’s rivals and not affect basic clothing ranges. 

The fashion retailer was among many companies that suspended operations in Russia over its invasion of Ukraine. The company said it was "deeply concerned about the tragic developments in Ukraine and stands with all people who are suffering." 

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H&M stores in Ukraine were temporarily closed to keep customers and employees safe. Russia last year accounted for around 4% of group sales, Reuters reported. 

FOX Business Danielle Genovese contributed to this report. 

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