H&M's McCartney Line Boosts Sales Less Than Range by Lagerfeld Dec. 15 (Bloomberg) -- Hennes & Mauritz AB, Europe's largest clothing retailer, said sales rose 11 percent in November, less than a year earlier, as a collection designed by Stella McCartney drew fewer shoppers than 2004's range from Karl Lagerfeld.
The gain in revenue excludes currency movements, according to a Waymaker statement released today by the Stockholm-based company. A survey of 18 analysts by SME Direkt showed an average estimate of 13 percent. Revenue climbed 24 percent in November 2004, the most in the past three years.
H&M is having difficulty repeating its success of last year, when the company came up with the idea of commissioning one-time collections from prominent designers to lure more customers. While the McCartney line drew large crowds in cities such as London and New York when it went on sale Nov. 10, the collection didn't boost sales as much as Lagerfeld's.
The Swedish company didn't give a reason for November's sales figure.
H&M is working to meet competition from rival Inditex SA, which is expanding more quickly. The Swedish company charged as little as $99.90 for dresses by McCartney, the 34-year-old daughter of musician Paul McCartney, whose clothes normally cost more than $1,000.
The retailer boosted its store count by 12 percent in the year through November, while Inditex, the Arteixo, Spain-based owner of the Zara clothes chain, has increased its total by 14 percent in the first nine months of its current fiscal year.
Sales at H&M rose 7 percent in September and 10 percent in October, less than analysts expected for each month, because of a mild autumn in Europe.
The shares fell 0.6 percent to 260.5 kronor in Stockholm yesterday. They have advanced 16 percent in the past year, compared with Inditex's 17 percent climb.
Fashion Trends
Rolf Eriksen, the Swedish company's chief executive, aimed to reverse a two-year decline in same-store sales in the year through November. H&M is trying to lead fashion trends with collections by McCartney and jewelry designer Solange Azagury- Partridge, while Inditex aims to follow popular designs.
The Swedish retailer has said earnings rose 36 percent in the fiscal third quarter through August as it offered fewer discounts and paid less for textiles from China. The company, which had 1,193 stores at the end of November, has also benefited from reduced inventory.
H&M is expanding in countries such as the U.S., now its fourth-largest market by number of stores after Germany, Sweden and the U.K. The company has about 90 U.S. outlets, including shops that opened last month in San Francisco.
Earlier this week, Inditex reported a 26 percent gain in profit for the three months through October, citing cost controls and openings of stores.
The Swedish company had to use McCartney herself to advertise the collection as a replacement for model Kate Moss, who was fired after a U.K. newspaper published photographs that purported to show Moss using cocaine. The retailer also used Italian model Mariacarla Boscono, saying it opposes drug use.
The McCartney collection had sold out in most markets, Nils Vinge, director of investor relations, said Dec. 1.
The company, whose average selling price is about 10 euros ($12), aims to offer fashionable clothing at lower prices than luxury retailers.
I'd say go for the 11.
