Analysis: H&M could do more to catch a lift from designer collaborations

Designer collaborations are helping Hennes & Mauritz (HM-B.ST) rise above a reputation for cheap chic, but the world’s second-biggest clothing retailer could do more to entrench that upmarket lift and defend its shrinking margins. Fired up by blanket billboard advertising and a social media blitz, shoppers stormed H&M stores and websites on November 14 for the launch of a limited-edition collection by Parisian Isabel Marant, famed for her edgy bohemian designs. H&M needs that buzz to help gross margins, which have fallen below 59 percent from almost 63 percent in 2010, while mid-market rival Inditex (ITX.MC) has improved theirs to about 60 percent from 57 percent. While H&M declined to comment on Marant’s impact on figures, sales in stores open at least a year jumped by a bigger-than-expected 10 percent in November, which H&M attributed to cold weather boosting purchases of winter clothing.

    

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