H&M to hire thousands amid strong profits

AFP - Sweden's cheap'n'chic fashion chain H&M bucked the economic gloom and doom on Thursday, reporting strong profit gains for its fourth quarter and announcing the creation of up to 7,000 jobs.

"H&M remains positive towards future expansion and the company's business opportunities ... The company will employ between 6,000 and 7,000 new employees during 2009," it said in its earnings report.

Europe's second-biggest clothing retailer behind Spain's Inditex which owns Zara, H&M already increased its number of employees by 6,400 people to 53,400 last year, according to figures for the end of its fiscal year in November.

"H&M is financially strong and is investing in the future," a spokeswoman for the group, Jenni Tapper-Hoel, told AFP.

"A downturn of the economy creates opportunities that a financially strong H&M can take advantage of," she said, citing stronger bargaining power with suppliers and landlords.

The group, known for its trendy yet affordable fashions, said its year to November 2008 net profit rose 12.5 percent from a year earlier to 15.29 billion kronor (1.44 billion euros, 1.89 billion dollars) with sales up 13 percent at 88.53 billion kronor.

For the three months to November, during the height of the global economic slowdown, net profit rose 9.4 percent to 5.08 billion kronor on sales of 26.3 billion kronor, up 15.3 percent.

The group said that while its growth had slowed in the third quarter, it managed to limit the effects of the crisis in the fourth quarter by lowering prices further.

"I think they will (do) quite well because the low price strategy will benefit them. People who ... have been shopping in more expensive stores will move down to H&M's stores," Evli bank analyst Anders Wiklund said.

He noted however that the first quarter of this year "could be quite tough."

H&M also said it planned to open more stores around the world, drawing even more customers.

Sales in its first two stores in Tokyo last year largely exceeded expectations and were H&M's "most successful" store openings, the group said.

In 2007-2008, H&M opened 214 new stores around the world, compared to 193 a year earlier. It closed 18, compared to 16 the previous year.

At the end of November, H&M had a total of 1,738 stores compared to 1,522 a year earlier.

For this year, H&M said it plans to open 225 new stores, most of them in Britain, France, Germany, Italy, Spain and the United States.

Its first Chinese store will open in Beijing this spring, when its first two stores will also open in Moscow, a market H&M considers to have "great potential for future growth."

Tapper-Hoel said most of the new hires this year would take place in the countries with new store openings.

"But we will also strengthen the organisation at our head office, mainly within IT, logistics and buying, to meet the expansion," she said.

Evli bank analyst Wiklund also noted that the company was benefiting from an advantageous exchange rate, as the recent depreciation of the Swedish krona favoured exports.