News: Fashion giant H&M’s sales recover in March as stores reopen after lockdowns.
STOCKHOLM (Reuters) – Fashion group H&M sales fell slightly less than expected in the three months to February and rose in the first half of March as pandemic restrictions were eased in some markets and hundreds of stores reopened.
The world’s second largest clothing retailer announced Monday that net sales were down 27% year over year, or 21% in local currencies, to 40.1 billion kroner ($ 4.72 billion).
According to Refinitiv SmartEstimate, analysts had forecast an average decline in sales of 30% for the period – the first fiscal quarter of the Swedish group.
“The sales development was significantly influenced by the COVID-19 situation, with extensive restrictions and a maximum of over 1,800 temporarily closed stores,” said a statement by H&M.
“Since the beginning of February, a number of stores have gradually enabled branches to be reopened, and around 1,300 branches were temporarily closed at the end of the quarter,” it continues. Online sales continued to develop very well.
RBC analyst Richard Chamberlain, who has a “sector performing” rating on H & M’s shares, said the numbers implied that online sales generated a stronger-than-expected increase in February.
According to H&M, sales rose 10% in local currencies between March 1 and 13, as many countries, including Germany’s largest single market, started reopening some stores. However, around 900 of the roughly 5,000 H & M stores remained closed on March 13 due to pandemic closures.
Chamberlain said most stores should be open by mid-April, barring new locks in Europe, H & M’s main market.
“We therefore see the potential for a strong sales recovery in the further course of the year, although the gross margin may surprise positively due to the weaker US dollar,” he said.
Market leader Inditex, the owner of Zara, predicted a return to healthy sales last week once the lockdown is lifted as it posted a 70% drop in profits for the fiscal year ended January. It was predicted that all stores would be open by mid-April.
H&M, whose full December-February earnings report is due March 31, is preparing for a loss in the quarter after the pandemic cut 2020 earnings by 88%.
H&M shares rose 3% in early trading and rose to 32% year-to-date
Reporting by Anna Ringstrom; Edited by Niklas Pollard, Kirsten Donovan
Original Source © Reuters