H&M Group sales rise in Q2, but pandemic restrictions are still an issue

By

Sandra Halliday

Published
Jun 15, 2021

H&M Group’s net sales rose as much as 75% in local currencies during Q2 (the March to May period), although given the strengthening Swedish Krona, its revenues translated into ‘only’ a 62% rise on a total basis.

Sales reached SEK46.509 billion (€4.6bn/£3.9bn/$5.6bn) and continued to be affected by the pandemic with around 1,300 of its stores temporarily closed at the start of the quarter. And stores that were able to open had restrictions regarding their operating hours, number of customers and store space. 

The company didn’t give any like-for-like figures, but analysts at Jefferies said the report showed “mixed progress” for the company and represents an organic Q2 sales drop of 13% on a two-year basis, after a 17% organic drop in Q1. The analysts said “this likely reflects European restrictions and China dilution amply offsetting a strong recovery in US demand”. They added that “trends have improved markedly in the early stages of Q3”.

H&M said that in some of the group’s largest markets, such as France and Germany, stores were closed continuously almost throughout the three months. But the situation has improved and by the end of the quarter, only 140 of its stores globally remained temporarily closed.

The global reopening has seen a continuation of “H&M group’s strong recovery”, it said. And it added that online sales “have continued to develop very well. This shows that customers appreciate the collections and being able to shop via their preferred channel”.

And as those Jefferies analysts remarked, since the end of Q2 — the almost-two-week period from June 1 to June 13 — the trend has been one of improving sales. Sales have risen 35% in local currencies year-on-year. Importantly, they’re also up 2% compared to the same fortnight in 2019. Admittedly, the firm has opened a number of new locations in the intervening period that would have boosted the total sales figure. But given that most markets are still subject to restrictions with around 180 stores temporarily closed as of June 13, the trend looks good.

Setbacks, such as all 50 of its stores in Malaysia having to close at the beginning of the month, don’t seem to be reversing the generally positive direction H&M is moving in.