A drive to increase wages for Asian clothing workers is likely to hit profit margins at world number two fashion retailer Hennes & Mauritz (H&M) as weak consumer demand and stiff competition make it hard to pass on the cost to shoppers.
The Swedish group issued its warning after missing first-quarter profit forecasts, due in part to investments aimed at catching up with rivals in fast-growing online fashion sales. Asian factories, which churn out the bulk of clothes for the world’s budget fashion market, have come under international pressure to improve wages and working conditions following a string of accidents, including the collapse of a Bangladeshi factory last year that killed more than 1,100 people. H&M sources the bulk of its clothes from garment factories in China, Bangladesh and Cambodia, among others. Source: Australia Network News
