In The Two Quarter Of This Year, Pre Tax Profits Fell By 17% Compared With Last Year's H&M.

In June 22nd, the H&M group released the two quarter report of fiscal year 2016, showing that sales reached 46 billion 870 million kronor in the 3-5 months of this year, up only 2.2% from the same period last year (45 billion 870 million).

The profit situation is even less optimistic: the pre tax profit in the two quarter of this year dropped by 17% compared with last year, and 7 billion kronor was recorded. At the same time, gross profit was 57.6%, narrowing 1.8 percentage points compared to the same period last year.

From H&M's nearly three years' earnings report, although revenue is still rising, it has been far worse than before.

Profits fell sharply, especially in the first quarter of this year, and H&M's pre tax profits plunged by nearly 30%.

H&M's share price has been miserable in recent years.

For the bleak performance, H&M group CEO Karl-Johan Persson is still an official word to blame for external causes:

Many of us

The sales volume was affected by the cold spell in 3 and April, and profits were squeezed because of the strong purchasing power of the US dollar.

However, many market participants do not seem to buy H&M chicken soup.

For example, Anne Critcholow, an analyst at faxing bank, said that higher inventory means that the group will further reduce its price, and gross profit margins will continue to suffer in the three quarter.

In fact, as early as the first quarter of this year, 3 months before the earnings report, H&M was invested by Morgan Stanley.

The key to H&M's failure is the family.

Retail giants used to expand their stores to drive sales.

According to the US business media Quartz quoted the view of Da Mo, although H&M 2006 has set up retail stores at a rate of 15% per year worldwide, it has brought about a rise in group sales, but correspondingly, the profit per unit area of the group declined almost every year in the same period.

In other words, H&M keeps opening new stores, but the average profit per store is not increasing.

Dmoro even boldly speculated that H&M will face a sales inflection point, and the sales volume of the group will be significantly reduced by 40% by 2020.

Da Mo also gave a negative chestnut argument: British electrical appliance retailer giant Dixons, after two years of profit decline in the entity store area, profits and market capitalization have shrunk by 70% and 90% respectively.

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In 2007, H&M's first flagship store in mainland China entered Shanghai. In the twinkling of an eye, China has become the fifth largest market of H&M.

During the period, the sales volume of H&M in the mainland has been increasing by two digits, and even an astonishing growth rate of 82%.

In the first half of this year, sales of H&M in the mainland showed a decline of 0.8%, a record of 5 billion 110 million kronor.

In the rush of fast fashion brands in China, H&M is about to become a thing of the past.

Looking at the domestic market performance for many years, DT Jun found that after 2011, the sales growth of H&M in China really slowed down, and the latest fiscal year fell to a new low of 16%.

It may be dragged down by the poor overall profitability of the group. H&M, which had been rapidly expanding, began to close its stores in China in the first quarter. As of the end of November last year, there were still 353 stores in China, but by the end of February this year, there were only 278 stores left, with a reduction of 75.

It seems that the mainland is also getting more and more difficult to make money.