H&M bounces back from slump
STOCKHOLM: Sweden’s H&M, the world’s secondbiggest fashion retailer, beat quarterly profit forecasts as it recovered more quickly than expected from a coronavirus-induced slump, in a positive sign for the industry.
Profit before tax for June-august, the company’s third quarter, came in around 2 billion Swedish crowns ($229 million).
That was well below 5 billion crowns a year earlier, but much higher than analysts’ mean forecast of 191 million crowns, according to Refinitiv’s Smartestimate model, which is weighted towards more recent estimates and higher-ranked analysts.
“H&M group’s recovery is beter than expected,” the company said in a statement on Tuesday. “More full-price sales combined with strong cost control enabled the company to already turn to profit in the third quarter.” Sales fell 19% to 50.9 billion crowns, against expectations for an 18% drop. In local currencies, the fall was 16%.
“Very good news and well above consensus,” said Societe Generale analyst Anne Critchlow of the third-quarter profits.
She has a ‘hold’ rating on the shares, which were up 11% in early trade, reducing their year-todate decline to 16%. Shortly ater company veteran Helena Helmersson replaced the grandson of H&M’S founder as CEO in January, the pandemic slammed H&M, pushing it into a deep loss in the March-may quarter as sales halved.
The company, which will publish its full quarterly report on October 1, has been cuting staff, opening fewer new stores than planned and permanently closing others to cut costs.
“Ater its Q2 results, management warned that increased markdowns would hamper its earnings by around 2-3%-points, but this now appears to have reversed to a slight positive effect,” analysts at Carnegie said in a note.