H&M makes fashionable comeback in coronavirus turnaround
H&M surpassed analyst estimates on profit in its most recent quarter, helping the world’s second biggest fashion retailer to bounce back after the coronavirus pandemic weathered sales.
Profit before tax for the three months to the end of August was around 2bn Swedish crowns (£177.1m), beating analysts’ mean forecast of 191m crowns according to data from Refinitiv.
However the figures remained well below the profit of 5bn crowns posted for the same third quarter period a year earlier.
Sales fell 19 per cent to 50.9bn crowns, performing slightly worse than expectations of an 18 per cent drop.
The retailer said H&M’s recovery from the pandemic was “better than expected”, after reporting sales were slashed in half during the second quarter and rising losses of 6.48bn crowns.
“More full-price sales combined with strong cost control enabled the company to already turn to profit in the third quarter,” it added.
H&M’s share price bounced more than 13 per cent after the positive results.
The retailer has been closing stores and cutting staff numbers in order to save on costs, after losses rocked new chief executive Helena Helmersson’s starting tenure.
The company veteran took the top job in January, taking over from the grandson of H&M’s founder Karl-Johan Persson.
H&M’s biggest rival Inditex, which owns fashion chain Zara, will report results for the three months to the end of July tomorrow. Meanwhile H&M’s full quarterly report is expected on 1 October.
“Given the disruption caused by Covid these numbers are pretty encouraging and suggest that despite the losses incurred in [the second quarter] the consumer still has the capacity to bounce back,” said Michael Hewson, chief market analyst at CMC Markets.
“The big question is whether this momentum can be sustained into [the fourth quarter], as unemployment levels in their main markets start to rise.”