Stockholm – H&M sales were hit in September, the Swedish retailer said on Thursday, after June-August gains exceeded expectations and pre-pandemic levels.
Disruptions to the global economy during the pandemic have upset global supply chains, leading to shortages of containers, storage and drivers to transport goods, and increased shipping costs.
“September 2021 sales in local currencies were slightly higher than the corresponding month of the previous year, even though demand was not fully met due to product flow disruptions and delays,” H&M said.
Chief executive Helena Helmerson told analysts and media constraints affecting H&M primarily in production, transportation and ports. It said the situation is improving now at the supplier level, but H&M is prepared for more delays in deliveries in the current quarter.
Fiscal third-quarter pretax profit at the world’s second-largest fashion retailer jumped 158 percent from a year earlier to 6.09 billion Swedish crowns. Analysts surveyed by Refinitiv had forecast an average profit of 5.05 billion crowns.
Profits before the pandemic were up 22 per cent compared to the same quarter in 2019.
“H&M Group’s profit growth for the quarter is primarily a result of well-received collections with higher full-price sales, lower markdowns and good cost controls,” Chief Executive Helena Helmerson said in a statement.
H&M said about 50 of its 5,000 stores currently remain temporarily closed, compared to 180 in early June. At the peak of the COVID-19 pandemic, most stores were closed due to lockdowns and restrictions.
H&M said an advantageous US dollar exchange rate offset significantly higher prices for shipping and raw materials in its third quarter, but cautioned:
“As the positive US dollar impact subsides and higher shipping and raw material prices persist, overall market conditions for procurement costs will gradually turn less positive in the fourth quarter.”
Cotton prices are rising on strong demand from China and adverse weather conditions in key producing regions.
The group proposed in November to pay a dividend for 2020 of 6.50 crowns per share. It said in July that the prospects for paying the dividend in the autumn were very good, after it had failed to make a resolution at its annual general meeting in May.
Shares of H&M remained largely unchanged at 0915 GMT.
Market leader Inditex, which owns Zara, also reported quarterly gains above pre-pandemic levels earlier this month.
Helmersom told analysts and the media that its situation remains complicated in China, where the group is facing backlash over comments made in 2019 about workers’ rights in Xinjiang province.
by Anna Ringstrom
This News Originally From – The Epoch Times