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H&M “significantly affected by pandemic” as profits drop 88%

// H&M profits collapse 88.2% to £174.4m in the year to November 30, 2020
// At least 80% of H&M’s store estate remained shut during the height of the pandemic
// H&M said its financial position “remains strong” despite the losses

H&M has recorded a slump in full-year profits and sales as the Covid-19 crisis hammered trading.

The fashion retailer saw profit collapse by 88.2 per cent to SEK 2 billion (£174.4 million) during the year to November 30, 2020.

Gross profit fell 23.6 per cent to SEK 93.5 billion (£8.15 billion) during the year.

READ MORE: H&M appoints new communications director

Net sales dropped 18 per cent on a local currency basis to SEK 187 billion (£16.3 billion).

H&M said sales progress was “significantly negatively affected by the pandemic, particularly in the second quarter when stores were temporarily closed in most markets”.

At least 80 per cent of H&M’s store estate remained shut during the height of the pandemic.

H&M said it “rapidly implemented” a series of measures during the year to mitigate the impact of the pandemic in areas such as product purchasing, staffing, financing and its rent obligations.

It added that “greater emphasis” on its digital channels “partly compensated” for the slump in store sales.

The retailer saw a “strong recovery” at the start of its fourth quarter, but said this was “significantly slowed” when the second wave of the pandemic led to new restrictions and lockdowns across its global markets.

On a local currency basis, net sales dropped 10 per cent to SEK 52.55 billion (£4.6 billion) in the three months to November 30.

In the period from December 1, 2020, to January 27, 2021, net sales dropped 23 per cent on a local currency basis compared with the same period a year ago.

H&M said its financial position “remains strong” despite the losses and there were “good prospects” it would pay a dividend to shareholders in the autumn.

“With strong, profitable online growth and good cost control we succeeded in ending the year in profit and with a strong financial position,” H&M chief executive Helena Helmersson said.

“Taking decisive measures quickly, combined with an attractive customer offering, led to a better recovery than expected up until the second wave of the pandemic struck.

“Our measures to mitigate the negative effects of ongoing restrictions and closures are continuing.

“Although the situation at the time of writing is highly challenging, the H&M group stands strong.

“Our key focus remains on developing strong, unique brands in order to always offer the best combination of fashion, quality, price and sustainability.

“The percentage of recycled and sustainable materials in the collections is consistently increasing and our brands are offering an ever-growing range of services for a more sustainable lifestyle.

“Together with our transformation initiatives, this will help increase our resilience and adaptability and will contribute to sustainable and profitable growth for the H&M group.”

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