Basic view of the closed H&M retailer, at Avenue des Champs Elysees, within the eighth quarter of Paris, as the town imposes emergency measures to fight the Coronavirus COVID-19 outbreak, on March 16, 2020 in Paris, France.
Edward Berthelot | Getty Photographs
Sweden’s H&M, the world’s second-biggest vogue retailer, beat quarterly revenue forecasts because it recovered extra rapidly than anticipated from a coronavirus-induced stoop, in a constructive signal for the trade.
Revenue earlier than tax for June-August, the corporate’s third quarter, got here in round 2 billion Swedish crowns (178.15 million kilos).
That was effectively beneath 5 billion crowns a yr earlier, however a lot increased than analysts’ imply forecast of 191 million crowns, based on Refinitiv’s SmartEstimate mannequin, which is weighted in the direction of more moderen estimates and higher-ranked analysts.
“H&M group’s restoration is healthier than anticipated,” the corporate stated in an announcement on Tuesday. “Extra full-price gross sales mixed with robust value management enabled the corporate to already flip to revenue within the third quarter.”
Gross sales fell 19% to 50.9 billion crowns, towards expectations for an 18% drop. In native currencies, the autumn was 16%.
“Superb information and effectively above consensus,” stated Societe Generale analyst Anne Critchlow of the third-quarter earnings.
She has a ‘maintain’ score on the shares, which had been up 11% in early commerce, decreasing their year-to-date decline to 16%.
Shortly after firm veteran Helena Helmersson changed the grandson of H&M’s founder as CEO in January, the pandemic slammed H&M, pushing it right into a deep loss within the March-Might quarter as gross sales halved.
The corporate, which is able to publish its full quarterly report on Oct. 1, has been reducing workers, opening fewer new shops than deliberate and completely closing others to chop prices.
“After its Q2 outcomes, administration warned that elevated markdowns would hamper its earnings by round 2-3%-points, however this now seems to have reversed to a slight constructive impact,” analysts at Carnegie stated in a notice.
Analysts have been warning it would take time for vogue retailers’ gross sales to recuperate to pre-pandemic ranges, and up to date indicators of second waves of COVID-19 infections in some nations have added to the uncertainty.
RBC analyst Richard Chamberlain, with a ‘sector carry out’ score on H&M, stated H&M’s revenue enchancment augured effectively.
“We predict most of this may be sustained going ahead and count on consensus revenue earlier than tax upgrades for 2021-22 within the vary of 5-10% following right this moment. We additionally assume it is a constructive learn for the attire sector normally, eg, (Primark proprietor) ABF, Inditex and Subsequent,” he stated.
H&M’s largest rival, Zara proprietor Inditex will report Might-July outcomes on Wednesday. Britain’s Subsequent and John Lewis report on Thursday.