PARIS — Hennes & Mauritz AB recorded a 16 percent decline in third-quarter sales in local currencies and said it expects to post a profit for the period, as business bounced back faster than it had expected.
“As a result of appreciated collections together with rapid and decisive actions, the H&M Group’s recovery is better than expected,” said the Swedish fast fashion retailer in a statement.
Net sales for the three months ending Aug. 31 were 50.87 billion Swedish kronor, or $5.81 billion, a decline of 19 percent when converted to Swedish kronor.
The retailer started out the quarter with the closures of 900 stores out of a network of 5,000; by the end of the period, 200 were shut.
H&M is forecasting third-quarter pre-tax profit of 2 billion Swedish kronor, which it will report on Oct. 1, thanks to more full-priced sales and strong cost control efforts, according to the group.
The retailer reported a loss in the first half as the coronavirus crisis weighed heavily on business, and outlined plans to focus on digital channels and speed store closures. Sales at re-opened stores recovered faster than the group had expected.
Fast-fashion retailers customarily revisit their global retail networks, culling underperforming stores and opening new ones, but H&M has increased the pace of closures and reduced planned openings, and in June projected a net decrease of around 40 locations.
Rival Inditex has focused on its digital prowess to navigate the choppy environment and is investing nearly 3 billion euros over the next two years to beef up its digital platforms and integrate store and online stock. The Spanish retailer is also sticking to its strategy of culling smaller stores to focus on larger, spruced-up flagships. COVID-19 disruptions have not called for a revision of this approach, executives have said.
The lockdown period boosted online business at both Inditex and H&M. Inditex expects the online channel to account for over a quarter of total sales in 2022, compared to 14 percent last year.