How H&M's Coping With Retail Travails

A German tax hike and more competition have dimmed the cheap-chic retailer's outlook, but stores in Asia plus a new, upscale chain may help

H&M may be the king of "fast fashion," but changes in some of its markets are nudging the retailer into a slower lane. The company, facing slackening sales growth, lost its place last year as Europe's largest clothing retailer to Spain's Inditex, parent company of competitor Zara. It may face tougher times ahead as competition grows, and as a result of pressures caused by Germany's raising its value-added tax by three points on Jan. 1, to 19%. Germany accounts for more than a quarter of H&M's total sales.

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