H&M reports jump in profits

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Hennes & Mauritz AB reported second-quarter earnings that beat analysts’ estimates, but said June sales could fall as much as 6 percent as the war in Ukraine and supply chain problems weigh on the retailer.

The Swedish budget retailer’s after-tax profit rose by a third to 4.78 billion kroner ($470 million), the company said on Wednesday. Analysts had expected 3.98 billion crowns. H&M reported a 12 percent jump in sales in local currencies earlier this month.

“Well-received collections have led to strong development, with full-price sales continuing to rise and discounts falling,” Chief Executive Officer Helena Helmersson said in a statement.

H&M and rival brick-and-mortar retailers have seen sales rebound as consumers refresh their wardrobes for work and special occasions after spending two years mostly at home.

Yet soaring prices for everything from energy to transportation to food are straining shoppers’ budgets and eroding confidence. Rising costs are also squeezing margins for some retailers.

The war in Ukraine and sporadic lockdowns in parts of China, where H&M has been the subject of a boycott for its refusal to use cotton from the Xinjiang region, aren’t helping. The company is closing a flagship store in Shanghai while it paused sales in Russia after the invasion.

In the current quarter, net sales in June are expected to fall 6 percent in local currencies from the same month last year, impacted by pauses in sales in Russia, Belarus and Ukraine, H&M said.

H&M said it is looking for ways to “prioritize initiatives, reallocate resources and ensure continued good profitability” as a direct result of the challenges it faces.

Warnings from analysts that H&M’s profitability will be hit have contributed to a more than 30 per cent fall in the share price this year. The company’s declared goal is to strengthen its market position by increasing prices less than the competition.

https://www.independent.ie/business/world/h-and-m-reports-jump-in-profits-41800624.html H&M reports jump in profits

Fry Electronics Team

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