H&M Flags Strong Recovery Despite H1 Profit Decline
PARIS — H&M Group trumpeted a good start to the third quarter as stores continue to reopen around the world.
“With our much-appreciated collections, our ongoing transformation and the fact that markets are gradually being opened up, our recovery is strong,” Helena Helmersson, chief executive officer of H&M Group, said in a statement on Thursday.
More from WWD
Net sales in the June 1 to 28 period rose 25 percent in local currencies, but business continues to be adversely affected by store closures, according to the retailer.
The Swedish firm released details of its results for the first half ending May 31, which showed the company is “almost back at the level we were at before the pandemic,” noted the executive, who cited the ongoing development of online sales as a highlight of the period.
Second-quarter results were stronger than expected, said Richard Chamberlain of RBC in an emailed note to clients, noting earnings per share of 1.67 Swedish kronor beat consensus expectations. The quarterly figure “should be the first of a succession of margin beats,” the analyst said.
Chamberlain added that June sale figure, however, was a bit softer than expected.
Profit after tax came to 2.77 billion Swedish kronor, or $320 million, with the company noting cost-control efforts allowed it to increase profit after financial items.
The group, which operates Cos, Monki, & Other Stories, Arket and Weekday in addition to H&M, has been cutting costs — shedding jobs in Spain, for example — and renegotiating leases for its retail network since the pandemic struck. Before COVID-19, it had embarked on an overhaul of operations to improve digital services and spruce up its offer. Signs of improvement had begun to emerge as the crisis hit.
Executives at the group have said they would continuously evaluate the fleet of physical stores, even as they are seeing an interest from customers in returning to shop in person when possible. In recent years, the group has stressed integrating digital shopping avenues with stores as a key priority.
H&M noted the label opened online business in Qatar in March, and began selling on the Zalora e-commerce platform in Indonesia, the Philippines, Malaysia and Singapore. The label will enter Cambodia through a franchise agreement next year.
