H&M returns to profits but profits remain below pre-Covid levels
Fashion retailer H&M on Thursday reported larger-than-expected second-quarter profit on Thursday as many of the company’s stores reopened, but profits remained well below pre-pandemic levels and the group’s shares fell sharply .
The Swedish company, along with other major clothing chains, is trying to bounce back from the pandemic, where restrictions and lockdowns earlier this year affected industry sales.
“As more people are vaccinated and restrictions are relaxed, the world is gradually opening up and customers can visit our stores again,” Managing Director Helena Helmersson said in a statement.
“Online sales continued to develop very well even after the stores opened,” she said.
H&M said 95 of its 5,000 stores remain temporarily closed due to restrictions currently, up from around 1,300 in early March.
The world’s second-largest fashion retailer posted second-quarter profit before tax of 3.59 billion kronor (353 million euros), compared to a loss of 6.48 billion a year earlier.
Analysts polled by Refinitiv on average expected a profit of 3.42 billion crowns.
Profit, however, was down from the corresponding quarter of 2019, when it was 5.93 billion kroner.
Sales from June 1 to 28, the first month of H&M’s third quarter, were up 25% year-over-year, measured in local currencies.
But compared to the same period in 2019, sales are down 4%, indicating that sales have slowed throughout the month. H&M had said earlier that sales for the first two weeks of June were higher than in 2019.
H&M shares were down 4% at the start of trading.
In China, where H&M was hit in March by a consumer boycott after the company’s 2020 comments on the Xinjiang region, sales in local currency fell 23% in the second quarter.
H&M said its board of directors has very good dividend prospects for 2020 in the fall. He didn’t offer one at his annual general meeting in May due to the pandemic, but signaled he would likely pay for one later in the year.
Retail sales in Germany, H&M’s largest market, rebounded in May as a gradual easing of restrictions supported consumer spending, data showed Thursday.
Also on Thursday, Associated British Foods said third-quarter sales by rival H&M Primark were above expectations in all markets. – Reuters