Hennes & Mauritz AB said Thursday that it will launch a new brand, Arket, after the summer, which is to focus on “a broad yet selected range of essentials for men, women and children, as well as a smaller, curated assortment for the home.”
“The overall direction and focus is quality in simple, timeless and functional designs,” H&M chief executive officer Karl-Johan Persson said in a statement, adding the brand will be positioned in a “slightly higher price segment than H&M with emphasis on materials, function and fit.”
The range is to be supported by a selection of external brands, as well as a café based on a “New Nordic Kitchen” concept where location permits.
The first store will open in London and online in 18 European markets in early fall, followed by stores in Brussels, Copenhagen and Munich.
Also on Thursday, H&M reported net profit in the first quarter dropped 3 percent, negatively affected by lower sales growth than planned amid tough market conditions in many of the retailer’s main markets as well as higher mark-downs.
Net income in the three months ended Feb. 28 fell to 2.46 billion Swedish krona, or $274.5 million. H&M’s gross margin, a key indicator of profitability, increased to 52.1 percent from 52.0 percent during the same prior-year period.
“Retail is going through a challenging period of change in which customers’ shopping behavior and expectations are changing at a fast pace as a result of growing digitalization. This is an accelerating development which also brings great opportunities,” H&M chief executive officer Karl-Johan Persson said in a statement on Thursday.
“To meet the rapid change that is going on in fashion retail we need to be even faster and more flexible in our work processes, for example as regards buying and allocation of our assortment,” he continued. “We are therefore investing significantly in our supply chain, such as in new logistics solutions with greater levels of automation, but also in optimising our lead times. In the changes we are making, advanced analytics will provide important support for decision-making.”
The Swedish retailer posted a 7 percent increase in first-quarter sales to 54.4 billion kronor, or $6.02 billion, as reported. In local currency, sales including VAT rose 4 percent, while sales excluding VAT amounted to 47 billion kronor, or $5.25 billion, an increase of 8 percent.
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