Retail Detail. H&M Plans to Takes Over the World (or at least Asia). Second City Style Fashion Blog

Fountain of 30

April 4, 2007 • Shopping

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Granted, there is a huge gap between 10 and 100 but honestly, do we need even half as many H&M stores in any country? It’s a big world out there with tons of places to shop, pick up new designers and well, spread the wealth. Sheesh.
Read more of Meere Bhatia’s report at Bloomberg.com
H&M Chief Plans to Open 10 to 100 Asian Stores Over Three Years
By Meera Bhatia  Bloomberg.com
April 4 (Bloomberg) — Hennes & Mauritz AB, Europe’s second- largest clothing retailer, plans to open between 10 and 100 stores in Asia over three years.
“It’s important that we’re knocking on the door of the Far East,” Chief Executive Officer Rolf Eriksen said in a March 29 interview at H&M’s Stockholm headquarters. “It could be 100 stores in the next three years in the region, it could be 25 or 10.”
H&M, which said last week that first-quarter profit rose 28 percent, is attracting shoppers with a line of clothes designed by Madonna. The company will add three stores in Hong Kong this year after opening its first Asian outlet there last month. Its Shanghai shop opens April 12.
Asia “is interested in western fashion, so the potential is significant if you get it right,” said Robert Clark, a senior partner at Retail Knowledge Bank in London.
The Madonna collection drew hundreds of customers to the Hong Kong store on March 10, a 3,500 square-meter (37,674 square feet) outlet in the city’s prime central district. Asia was previously a source of supply, rather than demand. H&M buys more than 60 percent of its clothes in the region and sells them at about double the price it pays.
Shanghai, Guangzhou
Inditex SA has 67 stores in Asia, mostly Zara outlets. The Arteixo, Spain-based company, which overtook its Swedish rival as Europe’s largest clothing retailer in 2005, last week said it’s counting on China and Japan in the next five years to expand in the region at twice its overall rate of growth.
H&M stock added 2.5 kronor, or 0.6 percent, to a record 413 kronor yesterday in Stockholm. Shares of Inditex have gained 45 percent in the past year, while H&M stock has risen 43 percent. The company’s shares have outperformed H&M’s for the past two years.
Eriksen, a two-decade company veteran and CEO for seven years, said he’ll consider more stores in the Shanghai area and cities such as Guangzhou, north of Hong Kong. The company will compete with Hong Kong-based Esprit Holdings Ltd., which plans 400 stores over the next three years.
“H&M and Inditex should concentrate on the big cities in Asia and forget the rest,” said Pablo Garcia, head of equities at Oddo Sociedad de Valores in Madrid. “The big distances you’d have to cover to expand everywhere would weigh on margins.”
To contact the reporter on this story: Meera Bhatia in Oslo at mbhatia2@bloomberg.net
–Joanne Molina for Second City Style

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