H&M Reports 27% Lower Quarterly Sales Amid COVID-19 Lockdowns

By Adriaan Brits Monday, March 15, 2021

H&M, the Sweden-based fashion company, reported better-than-anticipated sales for a quarter to end-February.

H&M storefront.

Demand Is Recovering in March

The fashion company has seen weaker sales during three months through February but has also witnessed a recovery in the first half of this month as COVID-19 restrictions eased in some countries, allowing the fashion business retailer to reopen hundreds of stores.

The fashion company reported net sales were down 27% compared to a year earlier to 40.1 billion crowns ($4.72 billion), compared to the decline of 30% expected from the surveyed market analysts.

"Sales development was significantly affected by the COVID-19 situation, with extensive restrictions and at most over 1,800 stores temporarily closed," the company wrote in a statement.

"Since the beginning of February, a number of markets have gradually allowed stores to reopen, and at the end of the quarter around 1,300 stores remained temporarily closed," the fashion business said and added that online sales continued to grow.

On a more positive note, the Swedish fashion business giant said business sales between March 1 and March 13 improved by 10% in local currencies in a number of markets, including the company’s largest market Germany. As of Saturday, roughly 900 H&M stores remained closed across other markets because of the COVID-19 pandemic.

H&M is set to publish a full earnings report for the three months between December and February on March 31. The retailer is expecting to report a business loss for that quarter as the COVID-19 pandemic cut profits by 88%.

RBC analyst Richard Chamberlain said that the earnings report indicates that online sales had significantly boosted overall sales recovery. He expects the majority of stores to reopen by mid-April and, therefore, a potential for “a strong sales recovery for the remainder of the year.” The weaker dollar is also expected to help the company’s gross margins to climb.

Shares of H&M climbed 1.2% in Stockholm today, marking a year-to-date rise of about 30%.

One of the company’s biggest rivals, the owner of Zara brand Inditex, said last week it expects a healthy sales recovery as soon as lockdowns are lifted, after reporting a 70% decline in business profits for the fiscal year ended January. Inditex also expects all of its stores to reopen by mid-April.

Summary

Sales of Swedish apparel retailer H&M dropped less-than-expected in the quarter ended February and rebounded in the first half of March as the company was able to reopen hundreds of stores.

About the Author


Headshot for author Adriaan Brits
As an analyst of global affairs, Adriaan has an MSC from Oxford, with diverse interests in the digital economy, entertainment, and business. He is a specialist trainer in Advanced Analytics & Media.

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