Swedish low-cost fashion brand Hennes & Mauritz AB says its first-quarter profit plummeted 44 percent after it was forced to cut prices and make markdowns due to higher than expected garment inventories.
It said Tuesday that its net profit for the December-February period stood at 1.4 billion kronor ($170 million) against 2.5 billion the previous year. Sales fell too, to 53.6 billion kronor from 54.4 billion.
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CEO Karl-Johan Persson said the start of the year was "tough" and that 2018 would be a transitional year as it was preparing to "take advantage of the opportunities generated by rapid digitalization."
The Stockholm-based group said inventories had risen by 7 percent in the first quarter to due expansion and weak sales. The markdowns, it added, would continue in the second quarter.