H&M reports Q2 loss, H1 turnover drops by 23 percent

Net sales at Hennes & Mauritz AB (H&M) decreased by 50 percent to 28,664 million Swedish krona (3,070.5 million dollars) in the second quarter. Also in local currencies, net sales decreased by 50 percent. Net sales in the six-month period decreased by 23 percent to 83,612 million Swedish krona (8,956.8 million dollars), while in local currencies net sales decreased by 24 percent. The company said in a statement that sales development since February has been negatively impacted by the Covid-19 situation. Loss after financial items amounted to 6,482 million Swedish krona (694.3 million dollars) in the second quarter, while loss in the six month period amounted to 3,978 million Swedish krona (426.1 million dollars).

Commenting on the results, Helena Helmersson, H&M CEO said: “Covid-19 continues to impact people, communities and companies around the world. Before the pandemic hit, we performed strongly – a result of many years of long-term investments to create the best offering for our customers and to meet the digital shift in the industry. This, combined with the fact that we have acted quickly to counter the negative effects of Covid-19 and that we are speeding up the transformation of the H&M Group, makes me convinced that we will come out of the current crisis stronger.”

Review of H&M’s Q2 and H1 performance

The company said, H&M group’s online sales increased by 36 percent in SEK compared with the second quarter the previous year. In local currencies the increase was 32 percent. Online sales, which increased by 40 percent in SEK and by 37 percent in local currencies in the first half, represented 28 percent of the group’s total sales. For full-year 2019 the share was 16 percent and for full-year 2018 14.5 percent. The company added that H&M accounts for the majority of the group’s sales, representing around 90 percent as at May 31, 2020. The remaining sales consist of the brands COS, & Other Stories, Weekday, Monki, Arket and Afound.

Gross profit decreased to 13,284 million Swedish krona in the second quarter, corresponding to a gross margin of 46.3 percent. For the six-month period, gross profit amounted to 41,318 million Swedish krona, corresponding to a gross margin of 49.4 percent.

H&M’s sales in the period 1–24 June 2020 decreased by 25 percent in local currencies compared to the same period the previous year. Currently 350 stores, representing 7 percent of the total amount of stores, are still temporarily closed, while a total of 48 of the group’s 51 online markets are open.

The company said, store optimisation is being accelerated. For full-year 2020 it is planned that a total of 170 stores will permanently close, rather than the 130 communicated previously, resulting in a net decrease in the number of stores of around 40. The number of openings has been reduced from the previously planned 165 to around 130. In the first half-year, the H&M group opened 47 stores including franchise and closed 65 stores, making a net decrease of 18 stores. The group had a total of 5,058 stores as at May 31, 2020, of which 277 were operated by franchise partners.

Picture:H&M media gallery