Dive Brief:

• Stockholm-based Hennes & Mauritz AB, known as H&M, is shrugging off recent economic stumbles in China and going forward with its expansion there. The retailer will open some 240 stores in Q4, mostly in China and the U.S.

• The company saw Q3 sales grow 11% in China and says its profitability is strong there, with just a slight slowdown in recent weeks.

• Many stores will be the company’s more expensive Cos brand. The company struggled in Q3 with the effects of the strong dollar because fabric and other garment sources are mostly paid for in dollars. Net profit rose to $630.8 million and gross margin fell to 55.9% from 58.3%, mainly because of the stronger dollar against the Swedish kroner and the weakest  gross margin in 11 years. 

Dive Insight:

H&M’s plans in China shows that, despite the country’s economic troubles, growth there remains healthy, with a well-established middle class in cities. And Chinese fast-fashion retailers haven’t yet mastered the speedy manufacture and supply chain methods innovated by Spanish company Inditex, which runs competing Zara stores worldwide.

“Profits have developed well during the first nine months of the year, although profits in the third quarter were negatively affected by increased purchasing costs,” CEO Karl-Johan Persson said in the statement.

In fact, the retailer is mostly focused on besting its rivals everywhere in the world, especially first place Inditex. Notably, Inditex is losing less to the brawny dollar because it produces most of its clothing in Southern Europe, where garment materials are less likely to be bought and sold with the American currency.

“We have a positive long-term view on China; our position there is strong, as is our profitability,” Persson said. “As far as the overall Chinese market goes, in the third quarter we have heard that there has been a slight slowdown from a very strong sales pace increase to somewhat calmer levels.”