STOCKHOLM: H&M’s global sales growth slowed in the second half of June, and the Swedish retailer suffered a sales hit in China as a result of social media-inspired boycotts over alleged human rights abuses in Xinjiang. After a deficit in the same quarter last year, the world’s second-largest apparel retailer posted a better-than-expected profit for the March-May quarter on Thursday.
H&M was removed from Tmall and domestic phonemakers’ app stores in March after the retailer expressed concerns about alleged Xinjiang human rights abuses https://hmgroup.com/sustainability/fair-and-equal/human-rights/h-m-group-statement-on-due-diligence/h-m-group-statement-on-due-diligence/h-m-group-statement-on-due-d
“In terms of China, the situation is still complicated. Beyond that, we’ll refer back to what we’ve already said “As H&M measured for the first time the impact of the China boycott, which began on social media, Chief Executive Helena Helmersson remarked. China was one of H&M’s two major suppliers last year, accounting for about 5% of group sales. H&M announced in a statement in late March https://hmgroup.com/news/statement hm china It was committed to recovering the trust of customers and partners in China, as well as maintaining a strong commitment to the country.
H&M, according to Helmersson, is keeping a careful eye on the situation in Bangladesh, another major supplier, after a spike in coronavirus infections caused the country to implement a rigorous shutdown, despite the fact that garment factories remain operational.
Uneven RECOVERYGroup sales for June 1-28 were up a quarter year over year, but 4% lower than in pre-pandemic 2019, as growth slowed from mid-June, showing the pandemic’s patchy recovery.
Helmersson explained the relaxation in the second half of June to investors and reporters by citing a number of variables, including difficult year-ago and 2019 comparisons, cold weather last week in several European markets, and how coronavirus limitations were being loosened.
“We see signs of a robust comeback in June as well,” she told Reuters. “Customers love our collections.”
Analysts said the numbers suggested sales were down 9 percent in the last two weeks of June compared to the same period last year, and that rival Primark has also stated that trade is currently quite erratic week to week.
“Recent trading weeks have revealed a mixed demand buildup,” according to Jefferies analyst James Grzinic.
At 1437 GMT, H&M’s stock was down 1.8 percent.
Pretax profit for the quarter was 3.59 billion crowns (US$419 million), compared to a deficit of 6.48 billion crowns a year ago.
“The world is gradually opening up and customers can once again visit our stores as more individuals are vaccinated and limitations are relaxed,” Helmersson added. “Even after the stores opened, online sales continued to grow rapidly.” H&M said 95 of its 5,000 locations around the world are currently shuttered, compared to 1,300 at the beginning of March. The company was not immune to increased freight charges due to a global shipping backlog, according to Chief Financial Officer Adam Karlsson, but he anticipated them to be mitigated. After failing to propose a dividend at its annual general meeting in May, H&M said the chances of paying one in the autumn were now quite favorable. Primark also boosted its earnings forecast on Thursday, citing higher-than-expected store sales across all geographies. (One US dollar equals 8.5635 Swedish crowns.) (Anna Ringstrom contributed reporting; Jane Merriman and Kirsten Donovan edited the piece.)/n
