STOCKHOLM (Dow Jones)--Swedish retail chain Hennes & Mauritz AB (HM-B.SK) Thursday posted strong gross margin and forecast-beating profit for the fourth quarter and said it plans to open 240 new stores in the new financial year.
H&Ms fourth-quarter net profit rose 21% to 6.15 billion Swedish kronor ($843.2 million) from SEK5.09 billion a year earlier. Nine analysts in a DJ/Factset survey on average had forecast SEK5.14 billion.
Revenue in the quarter ended Nov. 30 rose 6% to SEK28.01 billion from SEK26.31 billion a year earlier, above expectations of SEK27.91 billion.
H&M, the worlds third-largest fashion chain by revenue behind U.S.-based Gap Inc. (GPS) and Spains Inditex SA (ITX.MC), said operating profit rose 16% to SEK7.91 billion, from SEK6.82 billion a year earlier, beating a forecast of SEK6.89 billion. The group opened 250 new stores overall in the fiscal year just ended.
Total sales in December rose 15% from a year earlier, while sales in stores open longer than a year rose 3%.
Gross margin rose to 66.3% in the fourth quarter from 62.4% a year earlier.
"This is a great earnings report, and especially the gross margin is a very positive surprise," said Anders Wiklund at Evli Bank, which has an increase rating with target price SEK350 for the shares.
H&M said January sales, up to Tuesday, had increased by 13%.
Wiklund noted that sales seem to be going well this month, and added that December sales were a little better than expected.
H&Ms shares closed at SEK402.30 Wednesday. Wiklund said he definitely expects the shares will rise on the fourth quarter figures. During the last 12 months, H&Ms shares have risen 25%, compared with a 39% gain for the OMX index of the 40 largest Nordic companies.
