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H&M reports sales and profit recovery in Q2

By Prachi Singh

1 Jul 2021

Business

Image: H&M media gallery

The H&M group’s net sales in local currencies increased by 75 percent in the second quarter compared with the corresponding period last year. Converted into SEK, the company said, net sales amounted to 46,509 million Swedish krona in the second quarter. Net sales in the six-month period increased by 12 percent in local currencies, while converted into SEK net sales rose to 86,569 million Swedish krona.

Profit after financial items increased to 3,593 million Swedish krona in the second quarter, while profit in the six-month period amounted to 2,204 million Swedish krona.

Commenting on the trading update, Helena Helmersson, H&M CEO said: “With the combination of much-appreciated collections, rapid adaptation and further improvements, our recovery is strong. Despite continued restrictions, sales increased significantly compared with the previous year. The third quarter has started well and we are almost back at the level we were at before the pandemic. Together with profitable online growth and continued store optimisation this will contribute to long-term, profitable and sustainable growth for the H&M group.”

Review of H&M’s financial performance

The company added that group’s online sales continue to develop very well, even as the stores have gradually been allowed to reopen. Online sales increased by 40 percent in local currencies and by 32 percent in SEK in the second quarter. Online sales increased by 47 percent in the six-month period and by 39 percent respectively and represented 38 percent of the group’s total sales.

Sales for portfolio brands increased in the second quarter by 59 percent in local currencies and by 49 percent in SEK.

Gross profit increased to 25,049 million Swedish krona in the second quarter, corresponding to a gross margin of 53.9 percent. For the six-month period, gross profit increased to 44,106 million Swedish krona, corresponding to a gross margin of 50.9 percent.

The company said, net sales in the period June 1 to 28, 2021 increased by 25 percent in local currencies compared with the corresponding period last year. Compared with the same period in 2019 sales decreased by around 4 percent.

H&M expects the cost of markdowns in relation to sales to decrease by around half a percentage point in the third quarter compared with the corresponding quarter the previous year. Given a gradual improvement in the Covid-19 situation, combined with the company’s continued transformation work, H&M said, the group will be well positioned for a continued strong recovery during the year.

H&M plans store optimisation, to focus on online growth

For the full-year 2021, H&M added, the plan is that around 350 stores will close and just over 100 new stores will open, resulting in a net decrease of around 250 stores. The first H&M store in Panama is scheduled to open in the second half of 2021 via franchise.

In March H&M opened online in Qatar via franchise and in the quarter H&M has also been launched on the e-commerce platform Zalora in Indonesia, the Philippines, Malaysia and Singapore. In April Weekday was launched on the e-commerce platform AboutYou in 23 markets in Europe. Sellpy, the second-hand platform part-owned by H&M group, was launched in an additional 20 markets and is now available in a total of 24 markets in Europe. COS plans to launch online in Australia at the start of 2022, while Cambodia will become a new H&M market via franchise in 2022.

In the first half of 2021, the H&M group opened 50 stores including franchise and closed 155 stores, making a net decrease of 105 stores. The group had a total of 4,913 stores at May 31, 2021, of which 271 were operated by franchise partners.