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In the March-May quarter, H&M’s net sales dropped 50% from a year earlier to 28.7 billion crowns ($3.1 billion). But its online sales have increased by 36% in the period. The company’s stock price is down.
Swedish multinational clothing-retail company H&M Hennes & Mauritz AB (STO: HM-B) has released its financial report for Q2 2020. In the period from March 1 to May 31, the retailer’s sales were severely affected by the COVID-19 pandemic. The virus led to the temporary shutdown of 80% H&M stores. However, H&M took advantage of online sales that jumped by 36% in the period considered.
H&M has over 5,000 stores in 74 countries. In March, as the virus was spreading, the retailer had to temporarily close all its stores in the US, Canada, Australia, the UK, and other markets. In April, as the COVID-19 peak was behind, H&M started gradually reopening stores, with 18% of them still remaining closed.
H&M Online Sales
The retailer’s recovery is slow, and the sales are far below H&M’s potential. However, the report shows slightly better results than the analysts had predicted. In the March-May quarter, H&M’s net sales dropped 50% from a year earlier to 28.7 billion crowns ($3.1 billion). Meanwhile, analysts had on average expected a fall to 27.5 billion.
H&M online sales that are open in 48 of its 51 online markets have increased by 36% in Q2.
Further, the retailer noted that during the period from 1 to 13 June, its total sales were 30% down in local currencies in comparison with the same period last year.
“The pace of the sales recovery varies largely between markets.”
On June 26, H&M will release the six-month report and provide an updated summary as regards the COVID-19 situation. After that, the retailer will hold a telephone conference for the financial markets and media.
H&M shares were down 1.5% today, at 141.75 SEK, and are 26% down so far this year.
On the background of the pandemic, most retailing chains suffered losses. For example, last week, H&M’s Spanish rival Inditex SA (BME: ITX) reported a net loss of 409 million euros ($465 million) for Q1 2020. Besides, its constant-currency sales were down 34% in the period from June 2 to June 8.
However, Zara owner saw a 50% increase in online sales in the first quarter. The company reached a peak in April when its online sales soared by 95%.
RBC analyst Richard Chamberlain believes that retailers’ sales will keep recovering only gradually. He said:
“In many markets we expect to see customers preferring to shop locally and more pressure on urban locations more reliant on tourism and people using public transport.”
Retailers continue to work through the impacts of this pandemic, but there is still uncertainty in the current state of the market. Scientists are warning of the second coronavirus wave. In this case, there will be another massive consumer spending shift to online shopping but it won’t make up for the retail losses in 2020.