H&M feels your pain

H&M profits are feeling the negative US-dollar burn.

The Swedish retailer has seen first quarter sales grow to 43.7 billion kronor (A$8.89 billion), from 40.3 billion kronor a year earlier.

However, quarterly net profit has dipped from 4.7 billion kronor to 3.3 billion kronor.

H&M chief Karl-Johnan Persson said while new shops and online sales bolstered the group, currency woes continue to be an issue.

"Profits in this year’s first quarter have been negatively affected by a continued very negative US-dollar effect which made our purchasing much more expensive, as well as by increased markdowns due to larger volumes of winter garments that remained as a result of the warm autumn.

"The negative dollar effect continues for purchases made for the second quarter 2016, although the negative effect has begun to gradually decrease due to the start of the annualisation of last year’s strong US-dollar exchange rate.

"Should today’s exchange rates continue, the effect of the US dollar on purchasing costs for the fourth quarter will be neutral or slightly positive compared to the corresponding quarter the previous year."

H&M confirmed it will roll out 425 new stores this year, including its 4000th site in the Mall of India this month.

It will also roll out an additional 11 online markets, taking its total to 34.

Persson hinted the group's back-end systems could allow for further e-commerce penetration.

"For the past few years we have been in an intensive period of investments related to new brands and concepts, as well as IT and online.

"Among other things, these investments have enabled a fast roll-out of H&M’s very profitable e-commerce to further markets.

"Preparations are under way for a continued roll-out into all markets in the group."

The group operates a number of brands including Cos, Monki, Weekday, & Other Stories and Cheap Monday.