H&M profit drops 18% on high costs

STOCKHOLM, Sweden -- Hennes & Mauritz AB reported Wednesday that net income for its 2Q dropped 18% to $673 million, from $817 million in the year-ago period. The Swedish fashion retailer blamed higher procurement costs and promotional offers for the lagging performance. Sales edged up to $5.1 billion from $4.96 billion in the prior year quarter, but gross margin shrank to 61.7% from a previous 65.9%. Despite higher purchasing costs and a weak U.S. dollar, H&M said it remains focused on growth. CEO Karl-Johan Persson said his company sees "great potential for future growth in existing as well as