H&M: Sales Recover
H&M share price soared, recently gaining nearly 11% in a single day after the Swedish giant posted greater-than-expected figures. Accordingly, a preliminary profit before tax for the three months ending in August was reported at $229 million.
This figure is over ten times greater than the $21.8 million expected from the market analysts. For comparison purposes, H&M recorded a profit of over $570 million for the same period a year ago.
The fashion retailer saw its net sales tumble 19% to $5.81 billion, compared to a year ago.
"As a result of appreciated collections together with rapid and decisive actions, the H&M group's recovery is better than expected," H&M said in a statement. "More full-price sales combined with strong cost control enabled the company to already turn to profit in the third quarter."
The Sweden-based fashion retail giant witnessed a stronger rebound than expected in a quarter following the lockdowns and store closures.
"Third-quarter profit is indicated much better than expected," Societe Generale analyst Anne Critchlow said in response to H&M quarterly figures.
"This would be 60% down on last year’s 5 billion [Swedish] crowns [$570 million], but is still very good news and well above consensus."
Shares of H&M trade over 10% higher this week to log the highest levels since June.
Zara’s Inditex Rebounds
In June, Inditex — which owns brands such as Zara, Bershka, and Massimo Dutti - reported a net loss of $465 million for three months ending April. The swing is over $1 billion, as the company made a net profit of $834 million over the same period in 2019.
However, the rebound in sales was quicker than previously anticipated for the Spanish giant, Inditex. The retailer made sure it returned to a quarterly profit — for a quarter ending in July — despite a decline of 31% in sales. As a result, the latest quarterly financial report shows a Q2 net profit of $253 million, smashing market analysts’ expectations.
"The recovery and strong performance are due to the hard work, engagement and creativity of everyone in Inditex. I am particularly pleased with our online sales growth, which demonstrates the critical importance of our strategy to integrate store and online. This is a cornerstone of our unique business model,” Inditex’s executive chairman, Pablo Isla, said in a statement.
Inditex said that nearly all of its stores have reopened as the in-store sales recover, while online sales continue to surge. In particular, the company said its quarterly in-store and online sales from August 1 to September 6 rose but still 11% lower compared to 2019.
Online sales erupted 74% during the first half of the year. Additional costs also rose as the retailer had to pay over $360 million to integrate its stores and online platforms.
Shares of the company soared over 8% in Madrid on the latest set of quarterly financial figures. Although the buyers pared back some gains today, it was still enough for the stock to close over 6.5% higher on the week.
Major European fashion retail companies — Inditex and H&M — reported better-than-expected quarterly results. While it’s too early to say that fast fashion has fully recovered post-pandemic, the latest set of financial figures shows that a rebound has been quicker than originally anticipated.
About the Author
Mariliana has an MSC in consumer analytics and business strategy. She has a special interest in fast-moving industries and big data.