Fashion retailer H&M underlined the challenges on the high street today after high cotton prices and a drop in consumer spending power hit profits.
The Swedish chain, which has 2,297 stores worldwide including more than 180 in the UK, reported a 23% drop in pre-tax profits in the six months to May 31 to 9.3 billion Swedish krona (£900 million).
The company, which operates in 39 countries, said its gross margin had dropped to 59.9% in the period, from 64% a year earlier, as the high cotton price and soaring fuel costs squeezed its profitability.
H&M is the latest retailer to report challenging conditions as the rising cost of living and muted wage growth, as well as the tough economic climate, stifles household spending.
mfl
