H&M back in the black despite Covid-19 hit, shares jump
Hennes & Mauritz
kr0.00
16:46 19/04/24
Shares in H&M Hennes & Mauritz jumped on Tuesday after the Swedish fashion group said it had returned to profit.
The group, which owns the H&M, Weekday and Cos brands, among others, said third-quarter sales had been hit by Covid-19, with around 900 of its 5,000 stores still closed at the start of the period.
Net sales decreased 16% in local currencies in the three months to 31 August, or 19% in Swedish kroner to SEK50.87bn.
But despite the fall in sales, H&M said that more full-price sales, alongside "strong" cost control, had enabled it to turn a profit in the third quarter, with preliminary pre-tax profits of around SEK2bn.
Analysts had been expecting pre-tax profits of around SEK246m, after it reported a pre-tax loss in the second quarter of SEK6.5bn.
"As a result of appreciated collections, together with rapid and decisive actions, the H&M group’s recovery is better than expected," H&M said.
By 1430 BST, shares in the Stockholm-listed group had gained 11%.
Michael Hewson, chief market analyst at CMC Markets, said: "Given the disruption caused by Covid, these numbers are pretty encouraging and suggest that despite the losses incurred in the second quarter, the consumer still has the capacity still has the capacity to bounce back.
"The big question is whether this momentum can be sustained into the fourth quarter, as unemployment levels in its main markets start to rise."
As at the end of the third quarter, just over 200 of H&M’s stores remained temporarily closed.