H&M to cut prices after latest profit decline

Fashion retailer H&M will be forced to cut prices to help shift unsold merchandise over the summer after another decline in quarterly profit.

UNITED KINGDOM (REUTERS) - Feeling the heat - more signs like this can be expected at H&M this summer.

The Swedish retailer is to slash prices in a bid to shift growing piles of unsold merchandise after another decline in quarterly profit at the world's second-largest retailer.

They have fallen in the past two years as less people shop in-store and H&M says it will be tough to reach its target of a "somewhat better" year.

CEBR chief economic adviser Vicky Pryce says: "This isn't an isolated case of H&M, this is a more general malaise in the retail sector, in the UK certainly, and I suspect that even though there are huge opportunities elsewhere, and there are for H&M too worldwide, quite a large part of the developed world is moving in the same direction in terms of online, rather than going into stores."

Pretax profit in the three months to the end of May shrank 22 per cent from a year ago to US$670 million dollars. H&M shares fell 4 per cent at the opening - they have lost two-thirds of their value since 2015 record highs.

But they later turned positive.

Rumours of buyout plans after large stock purchases by the founding Persson family have been behind recent gyrations.

After decades of rapid expansion with more than 4,700 stores, H&M has struggled with increased competition from other budget brands.

It has also been less successful than Zara owner Inditex - which sources production close to its headquarters in northern Spain - in responding to fast-changing fashions.