I mentioned Hennes & Mauritz (OTCPK:HMRZF) last week as part of my international stocks shopping list, but I think the stock warrants its own independent analysis.
This Ikea of specialty retail is indeed a phenomenon. There are only two stores in the greater Los Angeles area, yet everyone seems to have heard about them. In Pasadena, CA, lines of twenty and thirty somethings run out around the store. The company is focused on delivering fashion for less for both sexes. Having been to a couple of their stores recently including the three story one in Chicago, their clothing lines are impressive and the prices range from moderate to unbelievably cheap. From business attire to casual wear to beach wear, H&M covers the entire spectrum of clothing for women, men and children. Fashionable clothes, great quality, low prices - seems like a great combination.
H&M employs over 60,000 people to operate over 1400 stores in 28 countries, yet only about 130 of these stores are in the US, primarily on the east coast. The company has big plans for expansion towards the west in both US and Canada. Some analysts believe that H&M could eventually grow to have 1000 stores in the US. The company opened its first store in the US in 2000, and since then the US has become one of its fastest growing markets, with sales up 30% this year over last year. Additionally, its biggest market, Germany, is the fastest growing non-emerging market in Europe and the company recently opened a couple of stores in China and Hong Kong.
H&M's philosophy is to provide fashion and quality at the best price and they have been able to do that by employing 120 designers and using independent suppliers in Asia and Europe rather than running its own factories.
