The operating profit of Swedish fashion retailer H&M, Hennes & Mauritz AB (OTCMKTS: HNNMY), has dropped 62%.

The company recently released its three-month report from December 2017 to February 2018, where it stated that weak sales in the fourth quarter and an unusually cold European winter were part of the reason why sales had dropped.

According to an article in the Toronto Star, approximately $4 billion (US) of clothing also went unsold, although the company has stated that this is mostly Spring clothing.

It’s CEO Karl-Johan Persson has said “the start of the year has been tough” and mentions how “2018 is a transitional year for the H&M group, as [they] accelerate [their] transformation so that [they] can take advantage of the opportunities generated by rapid digitalisation.”

The company has been failing to reduce and clear stockpiles and said in February that markdowns would continue to remain high.

H&M predicts that sales will grow by nearly 25% during the year, which will hopefully lead to better overall result for 2018.

In the company’s press release, the focus is on more positive ventures, including the launch of its online store in India and the planned launch of an online store in Saudi Arabia and the United Arab Emirates, later this year.

H&M will also be launching a new brand, Afound, that will be selling garments from several well-known clothing and lifestyle brands, including H&M, at a discounted price.

Although the company is launching a new brand, H&M also announced in January that it plans to close 170 stores this year. This will be the largest number of store closures for the fashion retailer within the last decade.

H&M’s shares reached the lowest in the year, yesterday, closing at SEK 120.94, or approximately $14.50 USD.

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