January 9, 2013 / 1:56 PM / 5 years ago

UPDATE 2-H&M to launch clothes stores for women

(Adds analyst comment, background)

By Veronica Ek and Simon Johnson

STOCKHOLM, Jan 9 (Reuters) - World number two fashion retailer Hennes & Mauritz will launch a chain of womens’ clothing and accessory stores in the spring, trying to catch up with rival Inditex’s push into different parts of the market.

While H&M has been rapidly expanding its core chain of stores selling cheap-and-cheerful clothes for men and children as well as women, it has lagged Inditex in diversifying into higher price ranges and different fashion concepts to attract a wider spread of customers.

H&M hopes its new “& Other Stories” stores, which will only sell womens’ clothes, will recoup some lost ground when they open in Barcelona, Berlin, Copenhagen, London, Milan, Paris and Stockholm, initially, and in a further three markets online.

Spain’s Inditex, which owns fast-fashion flagship Zara, already has eight separate brands to attract different types of shoppers including the upmarket Massimo Dutti.

H&M has fewer - its Collection of Style (COS) which sells more expensive clothes and a small number of Monki and Weekday stores aimed at teenagers. The Swedish company has also made a limited foray into interior furnishings with its Home concept.

The “& Other Stories” stores will sell clothes, shoes, bags and accessories, but H&M has been coy about how they will be different from the company’s more than 2,700 other shops worldwide which also stock such items.

Analysts say it will get harder for H&M to achieve its 10-15 percent yearly growth target for the core brand as its main markets become saturated, and it makes sense in the long term to diversify by adding more upmarket chains.

H&M is growing in Europe, North America and Asia and considering opening stores in the southern hemisphere.

“Over the next 3-5 years, this (the new stores) will have almost no effect at all,” said Niklas Ekman, analyst at Carnegie.

“But if we look on a 10-year horizon, if H&M is going to continue to grow, it is important they start new chains now.”

Ekman said where Inditex had been successful with a multi-brand strategy, H&M had had mixed results so far, though its Collection of Style stores had done well.

This difference is reflected in the retailers’ valuations, with H&M trading at 20.2 times expected earnings for the coming year versus Inditex at 24.4 times, according to Reuters Starmine data.

H&M spokeswoman Elke Kieft said the new stores would have a wide range of styles and prices.

“It varies from, for example, flipflops for 7 euros to leather boots for 225 euros ($290),” she said.

“A fabric bag could be 50 euros but we will have bags for around 200 euros as well, and everything in between.”

The stores will also sell cosmetics.

“Its our aim to be a one-stop styling destination,” Kieft said.

Inditex also owns teen fashion stores Bershka, underwear brand Oysho and casual youth label Pull & Bear. Outside the clothing sector it has Zara Home and accessory chain Uterque.

$1 = 0.7654 euros Reporting by Veronica Ek and Simon Johnson; Editing by Erica Billingham

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