H&M is optimistic about the reinstatement of the dividend
The world’s second-largest fashion retailer, H&M, reported better-than-expected profits and said it was close to pre-pandemic performance and there was “very good outlook” for it. restores its dividend.
But the Swedish group’s shares fell on Thursday after it also revealed that sales for the first four weeks of June were still below 2019 figures. H&M previously reported higher earnings than in 2019 for the first 14 days of the month. .
Second quarter pre-tax profit through the end of May was 3.59 billion crowns ($ 420 million), down from a loss of 6.48 billion crowns last year, and ahead of expectations analysts of 3.42 billion crowns.
“The third quarter has started well and we are almost back to where we were before the pandemic. . . The crisis has made us even stronger as a company. The lessons we have learned allow us to be even better and faster to make the most of new opportunities, ”said Managing Director Helena Helmersson.
Last year, H&M suspended its dividend, cut investments and accelerated its shift to online sales in response to the pandemic which, at its peak, closed four of its five stores.
The group, majority owned by the founding Persson family, has long struggled to keep up with Inditex, Zara’s Spanish owner who overtook it as the world’s largest fashion retailer a decade ago, but was showing signs turnaround before Covid hits.
He said net sales increased by a quarter in the first four weeks of June, but were still down 4% from 2019 levels. They were 75% higher in the second quarter compared to last year. he previous year, a period heavily affected by the pandemic. H&M shares were down 4% Thursday morning.
H&M began to reduce the size of its store network after continuing to open new stores even as more and more customers were shopping online.
Helmersson said H&M was investing more in technology, artificial intelligence and its supply chain to “meet increased customer expectations and further strengthen our competitiveness.” It still needed to improve its collections to give them more “local relevance”, she added.
Inditex has a sourcing closer to its main European markets, which allows it to react more quickly to changes in trends and demands, analysts said.
H&M said its financial position remains strong. He freed up SEK 3 billion in working capital by changing his invoice handling and payment processes, and added that his board believed there would be “very good prospects for a cash dividend in the future. ‘fall 2021’.