Mar 30, 2017
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H&M reveals new chain Arket, will debut Home standalones next year too

Mar 30, 2017

Financial analysts may have been all over H&M’s Q1 results first thing Thursday but the fashion sector wanted to hear just what it has planned for its brand new chain.

& Other Stories on Regent Street is close to the location of the new Arket chain - archiv

The company had already flagged that it would add to its existing brand line-up and revealed its name this morning. The new chain will be called Arket. It will debut “after the summer” initially on London’s Regent Street and online in 18 European markets, followed by stores in Brussels, Copenhagen and Munich.

The offer looks like a complete lifestyle approach with the company saying it will comprise “a broad yet selected range of essentials for men, women and children, as well as a smaller, curated assortment for the home.” Where space permits, stores will feature a café “based on the New Nordic Kitchen and its vision of quality ingredients and healthy living.”

The chain’s “overall direction and focus is quality in simple, timeless and functional designs.”

That means products “in a broad price range” but “in a slightly higher price segment than H&M with emphasis on materials, function and fit.”

Particularly interesting is the fact that the store will also offer a selection of external brands.

Not that Arket is the retail giant’s only new chain in the works. The H&M Home brand, which already exists online and inside H&M stores, will gets its first standalone stores next year too.

It’s 10 years since H&M began to add new chains to its offer with the launch of the Cos brand, right opposite the site of the new Arket store on Regent Street in a section of the street that is currently dominated by the company’s various brands.

Since then it has made acquisitions and also opened the & Other Stories chain. But how successful have these stores been and what about the core H&M offer?

They appear to be doing well on the sales front but on Thursday, the company said its Q1 net profits fell 3% and its sales were less than it had expected, with the tough market and the need for discounts denting its earnings.

Sales including VAT rose 7% to SEK54.369bn and sales in local currencies rose 4% in Q1 but it had hoped for more. Yet it saw “continued strong and profitable online growth for all the brands within the group” and “Cos, & Other Stories, Monki, Weekday and H&M Home continued to develop very well.”

And the fall in pre-tax profit was smaller than expected, dropping to SEK3.21bn, from the year-earlier SEK3.33bn, in the three months to February. The company also said that March sales have risen 7% in local currencies, although it cautioned that march and April should be viewed together to get a true picture.

So which markets suffered in Q1? Times were especially tough in some of the larger markets in which it operates, such as central and southern Europe and the US. And those markets are where a lot of work will be done to reshape the stores. The company has big plans to perk up sales, with stores that aren’t up to speed being closed plus a new look for others.

But in other markets, such as Sweden and the other Scandinavian countries, eastern Europe, Turkey, Russia, China and Japan its sales “developed well and [it] continued to take market share.”

And it is continuing to open new stores and enter new markets. Its first store in Kazakhstan has just opened and stores are planned for Colombia, Iceland, Vietnam and Georgia this year. In addition, H&M plans to continue its online rollout into six new markets, Turkey, Taiwan, Hong Kong, Macau, Singapore and Malaysia, during the first half.

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