Fast fashion retailer Hennes & Mauritz has moved some of its production out of China, Chief Executive Officer Rolf Eriksen said Wednesday. Eriksen was speaking at a press conference after the release earlier Wednesday of the company’s third-quarter results. Sweden was among those hit when European Union authorities declared some temporary quotas on Chinese imports had been reached, leaving hundreds of thousands of items stranded in warehouses and out of reach of retailers’ clothes racks.
After several weeks of intense negotiations, trade officials reached an agreement with China but the episode has left retailers doubtful of the E.U.’s commitment to permanently lift all quotas in a few years. Many are looking for sourcing opportunities outside China.
H&M investor-relations spokesman Carl-Henric Enhoerning said there had been a positive effect due to the lifting of some of the quota restrictions. But he said this positive effect will level off in the fourth quarter and disappear during the first three quarters of the 2006 fiscal year. Lower quota-related costs helped push H&M’s third-quarter gross margin up 2.9 percentage points to 58.8%, which beat market expectations.