Hennes & Mauritz AB (H&M), the world’s second-biggest fashion retailer, posted a bigger-than-expected rise in sales in the three months from March, joining its main rival, Inditex, in reporting a rebound in demand as the COVID-19 pandemic eases.
Net sales were up 17 percent year-on-year, or 12 percent when measured in local currencies, at 54.5 billion kronor (US$5.38 billion) in its fiscal second quarter, the Swedish company said in a statement yesterday.
Analysts polled by Refinitiv had on average forecast sales of 52.8 billion kronor.
Photo: Reuters
However, turnover was still below H&M’s second quarter in 2019 — before the emergence of the COVID-19 pandemic — when it was 57.4 billion kronor.
“Whilst in a less spectacular manner than Inditex last week, H&M also confirms today that the reopening process in Europe has led to strong demand conditions persisting in recent weeks,” analysts at Jefferies said in a note to clients.
“Investors will be keen to better understand the extent to which price recovery is offsetting mounting input pressures and rebuilding costs,” they said.
H&M’s biggest rival, Inditex SA, which owns the Zara brand, last week reported an 80 percent jump in quarterly profit, as post-pandemic demand soared.
“Whilst the top line improvement is encouraging, we are mindful that strength in clothing trends over summer could be short-lived as the consumer environment weakens,” JPMorgan Chase & Co analysts said in a note to clients.
“We note that Nordics sports retailer XXL profit warned on Q2 yesterday evening, and that this followed a warning last week from online clothing pure-play Boozt, with both citing weakening consumer sentiment,” they said.
H&M, which is due to publish its full quarterly earnings on June 29, did not comment on the figures.
In March, H&M, which has the bulk of its business in Europe, flagged price rises this year as it posted a quarterly profit below expectations amid high raw material and transportation costs.
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