Too early to call H&M a profitable retailer, say Rivals

After Swedish retail chain H&M reported profit in the first year of operations, its Indian rivals said, “It is too early to call it profitable.”

"It's too early to say. We need to see another few years pan out," said Jaydeep Shetty, chief executive of fashion chain Mineral.

"When you pay percentage of sales as rent, automatically you become profitable. They might have also capitalised their administrative overheads and their pre-operating expenses," Shetty added.

An executive with textile and brands major Arvind supported Shetty's view.

"Novelty factor has helped them so far. They have just started and got into best malls. We have to see how their business model works when they go to smaller cities," the execuitve said.

He also explained that H&M is aggressive on pricing which attracted the shoppers.

When contacted, a H&M spokesperson said, "We are happy that our customers here are appreciating our offer in a sustainable way, we are here for the long term. We look forward to continuing to strengthen our offer for our customers across the country."

After Delhi and surrounding towns last year, H&M also opened stores in Mumbai, Chennai and other cities and got good response.

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