The pandemic has been overcome in most of the world, but retail continues to suffer from the shards that remained.
H&M is a good example.
The second representative of fast fashion in the world, after Inditex (Zara), reported at the beginning of the year profits well below expectations and previous analyses.
Sales, in addition, were below the same quarter of 2020, before the arrival of the coronavirus.
After a year of strong growth from the deconfinements and thanks to comparison with the dismal fiscal quarters of 2020, H&M’s sales growth slowed in the first fiscal quarter of 2022 (December-February).
Swedish company reported This Thursday, March 31, quarterly profits are much lower than expected due to various reasons, among which can be listed the resurgence of covid at the end of last year, the container crisis, inflation and the income problems that many consumers have in different parts of the world.
Between December 2021 and February 2022, H&M made a pre-tax profit of 281.9 million kroons (about $30 million), well below the 1.05 billion kroons in profit that Refinitiv respondents expected.
The results also show that H&M’s profits are below the level before the arrival of the coronavirus, when the Swedish company raised 2.5 billion crowns in the same quarter of 2020.
Faced with this scenario, H&M shares collapsed 8.1 percent in early trading on the local stock market.
In a statement, H&M said that both turnover and profits were heavily affected by the negative effect of the latest lockdowns in Asia, as well as the delay in deliveries of inputs due to supply problems.
H&M also says they invested heavily in technology and logistics, which hurt profits.
Sales rose 22 percent year-over-year, 10 percent less than two years earlier, before the pandemic hit.
Post-pandemic: H&M’s numbers match Zara’s
The results of H&M’s finances in the post-pandemic are in line with those of the company that owns Zara, Inditex.
The Spanish company said that turnover between March 1 and 29, 2022, at the start of its second fiscal quarter, grew by just 5.9 percent,
Excluding results in Russia, Belarus and Ukraine, countries where H&M temporarily closed stores due to Vladimir Putin’s invasion, the March data says the Swedish company sold 11 percent less in March than in the fiscal first quarter.
How will outlet closures hit in Russia?
It is not known for now.
What is a fact is that in 2021 Russia represented 4 percent of the holding’s turnover.
In the statement, H&M speaks of “uncertainty” about what is happening in Eastern Europe and that they are “constantly monitoring and evaluating the situation.”
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