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Sweden's Hennes & Mauritz 1Q profit falls

SWEDISH fashion chain Hennes & Mauritz AB today said its first-quarter net profit fell by 12 percent due to unfavorable currency exchange rates and lower consumer spending amid the global economic downturn.

The company said net profit for the three months ending Feb. 28 fell to 2.6 billion kronor (US$321 million) from 2.9 billion in the same period a year earlier.

H&M, which makes its purchases in US dollars, said the strengthening of the dollar against the Swedish krona had a negative effect on results.

First-quarter sales, excluding value added tax, rose by 18 percent to 23.3 billion kronor from 19.7 billion kronor a year ago. The increase in local currencies was 4 percent.

Europe's second largest retailer said the sales were "affected by a continued restrained consumption due to the current recession," but pointed out that online and catalog sales have developed positively.

The company said it plans to open its first store in Seoul, South Korea, in 2010 and will start franchise operations in Jordan the same year.

The number of H&M stores worldwide reached 1,748 in the first quarter, up from 1,529 in the same period last year.

The company said it will continue to expand and plans to open 74 new stores in the second quarter in Germany, France, Britain, Italy, Switzerland and Spain.
Stockholm-based H&M is present in more than 30 countries and employs nearly 55,000 full-time staff.


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