H&M has warned investors to expect lower profits in 2018 as it ploughs investment into new concepts and online to turn around its fortunes.
At its first Capital Markets Day, H&M said like-for-like sales were “expected to remain negative” during 2018, although it predicted a gradual improvement heading into 2019.
The retailer told investors it planned to invest heavily in online and its ‘new business’ fascias including Cos, Weekday, Monki and H&M Home.
It forecast 25% sales growth for both ecommerce and new business this year, as well as 4% revenue uplift from new stores.
H&M said the “ongoing shift from physical stores to online is expected to continue” and would increase funding for digital initiatives as a result.
It said 45% of total capex in 2017 was directed towards online.
The heavy investment meant online accounted for 12.5% of total sales and 22% of profits during 2017.
H&M plans to grow this figure 20% per year until 2022, when it expects ecommerce sales to amount to £6.7bn.
The fashion retailer also vowed to gain greater control over stock in a bid to avoid the negative impact high markdowns have had on recent performance.
As previously reported by Retail Week, H&M has abandoned plans to call on shareholders to reinvest in the business, saying the scheme was difficult to implement “from a technical perspective and because of time constraints”.