Stockholm (Reuters) – Sweden’s H & M is the second-largest fashion retailer in the world. On Wednesday, the company announced that its quarterly profit grew by 33 percent, which was better than expected, because customers flocked to its stores after the pandemic.
In the second quarter, before taxes, the company made 4.78 billion Swedish crowns ($470.76 million), which is more than the 3.59 billion crowns it made in the same time last year. Refinitiv asked analysts to predict, on average, a profit of 3.87 billion crowns.
“Online sales continue to do well, and sales in stores have gone up by a large amount,” CEO Helena Helmersson said in a statement.
According to a statement issued by the Swedish company, sales for the second quarter of its fiscal year totaled 54.5 billion crowns, a 12% increase over the same period last year.Analysts polled by Refinitiv said that sales would be 52.8 billion crowns on average. The company’s biggest competitor, Inditex (BME: ITX), which owns Zara, also reported an 80 percent increase in first-quarter profits due to sales that were up a lot.
According to H&M, sales in June are likely to be 6% lower in local currencies than in the same month last year.This is mostly because the company stopped doing business in Russia, Ukraine, and Belarus.
After Russia invaded Ukraine at the end of February, the company closed its stores in Russia for a while in March. In the fourth quarter of 2021, the country was H&M’s sixth-largest market, making up 4% of sales.
It also shut down stores in China, where COVID-19 lockdowns have made people less interested in shopping.
High costs for raw materials and shipping have been a problem for fashion retailers, and companies have been raising prices to make up for it.
“There are still problems and delays in the supply chain, but they are getting better,” Helmersson said.
Even though costs went up, H & M’s operating margins went up from 8.3 percent to 9.2 percent because full-price sales went up and markdowns went down.
($1 is worth 10.1538 Swedish crowns)
