H&M Profit Drop Beats Estimates As Margin Damage C

September 29, 2011, 7:57 AM EDT


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By Armorel Kenna
(Updates with analysts comment in sixth paragraph, CEO quote in 11th.)

Sept. 29 (Bloomberg) -- Hennes & Mauritz AB, Europes second-largest clothing retailer, reported a drop in third- quarter earnings that beat analysts estimates as the company contained the tint of high cotton wrongs and wages in Asia.

Operating kale fell 17 per centum to 4.71 billion kronor ($700 million) in the terzetto months ended Aug. 31, Stockholm- based H&M said right away in a statement. The average of 17 analyst estimates compiled by Bloomberg was 4.35 billion kronor. The gross margin narrowed to 58.6 per centum from 60.5 percent a year earlier, beating the 57.8 percent average estimate.

H&M shares rose to the highest in more than a month. In addition to a near doubling in the price of cotton last year, the retailer has also had to contend with high labor expenses in Asia, where it gets about 75 percent of its clothes.



succeeding(a) earnings may benefit from a 54 percent decline in cotton prices since they surged to a record in March.

Gross margin is a relief, Jan Meijer, an analyst at ING technical Banking in Amsterdam, said in an e-mail. The market was worried that H&M margins would be impacted heavily by higher cotton prices and wages in Asia.

H&M gained as much as 5.7 percent in Stockholm job and was up 9.2 kronor, or 4.7 percent, at 205 kronor as of 1 p.m.

higher(prenominal) Inventory

The third quarter could have been a lot worsened from an input be perspective, given higher cotton costs still filtering through to the company, Societe Generale analyst Anne Critchlow said in an...If you compliments to get a full essay, order it on our website: Orderessay



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