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H&M Shows Cost Discipline as Retailer Adapts to Digital Era

  • Second-quarter earnings beat estimates on expense control
  • Retailer trims store-opening goal as inventories surge
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Cost-control is the new watchword at Hennes & Mauritz AB as the European fashion giant seeks to compensate for slowing sales growth, rising inventories and dwindling profitability.

The Swedish retailer on Thursday posted second-quarter earnings that exceeded analyst estimates, with the company’s efforts to contain expenses making the difference. Contending with a growing backlog of unsold clothing that will require greater markdowns, H&M trimmed its store-opening target and set a goal for online sales growth of at least 25 percent a year.