H&M says sales across its retail channels grew strongly in the first quarter of its year, despite the continued effects of the pandemic in many of its markets. But growth was muted in March, when the retailer temporarily closed its shops in Ukraine, Russia, and Belarus.
H&M says it has seen a strong first quarter recovery for in-store sales, while online sales have also performed well. “This,” says H&M chief executive Helena Helmersson, “shows the value of having both physical and digital channels which strengthen and complement each other.”
“Having ended the last year with sales back at the same level as before the pandemic and in a strong financial position, we started the new year with increased initiatives to create an even better foundation for long-term growth,” she says. But, she adds: “In addition to the general consequences of the pandemic such as disruptions and delays in the supply chain, some of our major markets were impacted by a new wave of the pandemic in the first quarter.”
The retail group has focused on developing the customer experience in the first quarter, through steps including integrating sales channels and investing in infrastructure including technology, the supply chain, renewable energy and sustainable materials. It has also expanded its range, while selling more sustainable products.
Shoppers, says Helmersson, paid full price for more of its clothing, and that meant discounting was lower than expected. “Well-received collections led to full-price sales continuing to increase, which led to more than expected decrease of markdowns,” she says.
In its annual sustainability report, also published today, H&M points to a tripling in the use of recycled materials to 17.9% as it moves toward a target of 30% by 2025. It also says that 80% of materials are now recycled or sourced in a more sustainable way. In January the retail group set a target of doubling its sales while halving its carbon footprint by 2030.
Performance in the first quarter and beyond
The update comes as H&M group reports net sales of SEK 49.2bn (£4bn) in the first quarter of its financial year, to February 28 2022. That’s 23% up the same time last year when reported in Swedish kroner and 18% up in local currencies. Operating profit of SEK 458m (£37.3m) was up from a loss of SEK 1.1bn (£91.2m) a year earlier.
H&M has paused sales in Russia, Belarus and Ukraine, affecting a total of 185 shops and online sales in Russia. The Russian invasion of Ukraine started towards the end of H&M’s first quarter of the year but the group says that between March 1 and 28, net sales increased by 6% year-on-year in local currencies – rising to 11% when Belarus, Russia and Ukraine were excluded.
“We are deeply concerned about the war in Ukraine and sympathise with all those affected,: says Helmersson. “We closed our stores in Ukraine for the safety of our colleagues. Since the beginning of March all sales have also been paused in Russia and Belarus. H&M Group, the H&M Foundation and the Erling-Persson Foundation have so far donated around SEK 170m (£13.8m) as well as clothes and other necessities to organisations including UNHCR, Save the Children, the Red Cross and UNICEF. The H&M group cares about all our colleagues and stands with all those around the world who are calling for peace.”
H&M continues to expand into new markets. Its first shop in Cambodia is now operating through a franchise, and later this year it plans to start trading in Ecuador, Kosovo and North Macedonia directly, while selling through franchises in Costa Rica and Guatemala. In 2023 it will open its first shop in Albania.
H&M is a Top50 retailer in RXUK Top500 research.
