H&M sales rise despite fresh wave of Covid-19 disruption

The Swedish fashion giant said net sales increased 18% on a local currency basis during the three months ending February 28. In constant currencies, net sales grew 23% to SEK 49.2bn (£4bn). 

H&M booked an operating profit of SEK 458m (£38m) during the period, compared with a loss of SEK 1.1bn (£93m) in its first quarter the previous year. Gross profit rose 27% to SEK 24.3bn (£2bn), as gross margins climbed 1.7 percentage points year on year to 49%. 

The clothing titan hailed growing full-price sales and lower costs of markdowns as key reasons behind its bottom-line improvements. 

H&M paused sales in Russia, Ukraine and Belarus earlier this year as a result of the ongoing conflict in Eastern Europe. The retailer said that, between March 1 and 28, net sales increased 6% year on year in local currencies and were up 11% excluding Russia, Ukraine and Belarus.

Despite the war, H&M is pressing ahead with its international expansion. It opened its first store in Cambodia earlier this month via a franchise partnership, and plans to open for business in Ecuador, Kosovo and North Macedonia later this year. H&M will also launch in Costa Rica and Guatemala through franchise partners. 

H&M chief executive Helena Helmersson admitted that some of the retailer’s key international markets were hit by “a new wave of the pandemic” during its first quarter, while “general consequences” of the coronavirus crisis, such as supply chain disruptions and delays, also persisted.  

But Helmersson said: “Despite this we saw a recovery of sales in physical stores compared with last year, while online sales continued to perform well. This shows the value of having both physical and digital channels which strengthen and complement each other. Well-received collections led to full-price sales continuing to increase, which led to a more-than-expected decrease of markdowns.”

Helmersson added: “Having ended last year with sales back at the same level as before the pandemic and in a strong financial position, we started the new year with increased initiatives to create an even better foundation for long-term growth. 

“The initiatives mainly involve continuing to develop the customer experience by, for example, further broadening the assortment and integrating the sales channels, and by continuing to invest in infrastructure such as tech and the supply chain, but also in renewable energy and sustainable materials.”

H&M has also unveiled its sustainability report today, which revealed the group has tripled its use of recycled materials, slashed plastic packaging by more than a quarter and achieved a 9% reduction in Scope 3 emissions compared with 2019 levels.

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