- H&M shoppers return to physical stores to shop around the world and numbers for the second fast fashion brand improve.
- The fashion retailer reported earnings 33 percent above the same quarter in 2021.
- Cutting sales and discount sales was a key strategy to improve profits in a difficult year for the global economy.
H&M, the second largest fast fashion retailer on the planet, recorded this Wednesday, June 29, an increase of 32.9 percent in the benefits obtained in the quarter between March and May.
The explanation is simple: consumers flocked to H&M outlets around the world and profits exceeded Wall Street analysts’ forecasts.
The Swedish company said in a communiqué which made pre-tax profit of SEK 4.78 billion, about $470 million in the fiscal quarter ending in May. A year earlier, he had earned 3.59 billion crowns.
Market experts were forecasting an increase in H&M’s earnings of 3.86 billion crowns.
H&M CEO Helena Helmersson said in a note to shareholders that sales at brick-and-mortar outlets “grew remarkably” and online channels “continue to perform well.”
On the other hand, the company announced that it will use the profits and the authorization granted by the shareholders to buy back shares worth about 3 billion crowns.
With these developments, all positive for the brand that has a presence in practically all of Latin America, H&M shares increased their value by 3 percent.
Closing in Russia was serious for H&M
Total revenue, meanwhile, increased 12 percent.
As for what’s to come for H&M in the rest of the year, the retailer said that sales so far in June are not following the trend of the previous quarter: they fell 6.1 percent.
The cause: the suspension of sales in its physical stores and via the web in Russia, Ukraine and Belarus.
The company closed its outlets in Russia in Marchdays after Vladimir Putin’s country’s invasion of Ukraine, in response to strong international pressure.
Russia is not a minor market for H&M: that country was the sixth largest market for the brand and represented 4.1 percent of its revenue in the last quarter of 2021.
On the other hand, keep in mind that this year’s comparison is made with a year in which H&M had a lot of trouble in China because of the company’s comments about the Xinjiang region.
The consumer blockade caused its sales in that market to plummet in 2021.
Zara also has her summer
Last week, H&M’s biggest rival in fast fashion, Inditex, the Spanish owner of Zaraannounced that its profit grew 79 percent in its fiscal first quarter thanks to a sales explosion.
Although raw materials and transportation costs rose, this was not an obstacle to improving sales for both companies, since they passed on the increase to consumers.
For H&M, Full-price sales and fewer markdowns were key.
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