H&M eyes Irish expansion as profits hit by higher costs

Gordon Deegan

The directors of the Irish arm of clothing retailing giant, H&M see growth opportunity here and are looking to optimise their portfolio with interior uplifts and rebuilds at Liffey Valley in Dublin and Cork.

That is according to new accounts for H&M Hennes & Mauritz (Ireland) Ltd which show that pre-tax profits declined by 46 per cent to €689,776 due to higher costs in 2021.

The Swedish headquartered retailer’s pre-tax profits declined despite revenues increasing by €2.08 million or 4.5 per cent from €46.41 million to €48.49 million in the 12 months to the end of November 2021.

The directors state that the retailer’s decrease in gross margin by 8.5 per cent was predominantly due to cost of sales increasing by 41 per cent from €12.09 million to €17.09 million.

The directors state that post-year end in May 2022, dividends of €2.5 million were declared to its sole shareholder, H&M Hennes & Mauritz GBC AB.

In accounts signed off on March 27th, the directors state that the retailer’s service has been enhanced with the launch of ‘click and collect’ and a new membership programme at the end of 2022.

On the retailer’s future developments here, the directors state that they aim to maintain growth in competitive market conditions "and will continue to look for suitable locations for new stores and ensure relevance of product profile".

The business achieved the 4.5 per cent increase in revenue despite one store closing during the year. The directors state that the H&M Hennes and Mauritz Ireland “is a profitable business”.

They state that “post lockdown restrictions easing, the stores traded well meeting customer demand”.

The directors state that the company “to protect its financial position during the pandemic, the company availed of the necessary support from Government schemes as well as actively managing the liquidity risk”.

The directors add that “the company’s flexible business model whereby the supply chain is completely through group undertakings proved to be pivotal during this period due to its adaptability to the change in the external market conditions”.

Staff costs in 2021 increased by 3.5 per cent from €8.15 million to €8.43 million. The firm also benefited from unspecified ‘other operating income’ of €264,054 in 2021.

The profit for 2021 takes account of non-cash depreciation costs of €9.13 million and lease costs of €2.65 million. At the end of November 2021, the firm had shareholder funds of €15 million that included accumulated profits of €8.43 million.

Globally, the H&M Group operates 4,414 stores.