H&M September sales affected by supply delays after profit surpasses pre-pandemic level
- H&M reports third quarter pre-tax profit of SEK 6.1 billion
- Industry recovers from crisis as restrictions ease
- Global supply issues meant demand was not fully met in September
- Unchanged actions
STOCKHOLM, Sept.30 (Reuters) – Supply disruptions hampered sales of H&M (HMb.ST) in September, the Swedish retailer said on Thursday, after its June-August profits exceeded expectations and exceeded sales levels. ‘before the pandemic.
The disruptions to the global economy during the pandemic have disrupted global supply chains, leading to shortages of goods as well as containers, storage and drivers for transporting goods, and causing shipping costs to rise.
“September 2021 sales were slightly higher than the corresponding month of the previous year in local currencies, although demand could not be fully met due to disruptions and delays in the flow of products,” H&M said.
Managing Director Helena Helmersson told analysts and media bottlenecks affecting H&M primarily production, transportation and ports. She said the situation was now improving on the supplier side, but H&M was bracing for more delays in deliveries in the current quarter.
The pre-tax profit for the fiscal third quarter of the world’s second-largest fashion retailer jumped 158% from the previous year to SEK 6.09 billion. Analysts polled by Refinitiv on average expected a profit of Kroner 5.05 billion.
Compared to the same quarter in 2019, before the pandemic, profit was up 22%.
“The increase in H&M Group profits for the quarter is primarily the result of well-received collections with more full-price sales, lower markdowns and good cost control,” Managing Director Helena Helmersson said in a statement.
H&M said around 50 of its 5,000 stores were currently temporarily closed, up from 180 in early June. At the height of the COVID-19 pandemic, most stores were closed due to closures and restrictions.
H&M said a favorable US dollar exchange rate offset significantly higher transportation and raw material prices in the third quarter, but warned:
“As the positive effect of the US dollar wanes and shipping and raw material prices remain high, the overall market situation for purchasing costs in the fourth quarter will gradually become less positive. “
Cotton prices are rising due to strong Chinese demand and unfavorable weather conditions in major producing regions.
The group offered to pay a 2020 dividend of SEK 6.50 per share in November. He said in July that the prospects for a dividend payment in the fall were very good, after failing to propose one at his annual general meeting in May.
H&M shares were pretty much unchanged at 9:15 a.m. GMT.
Market leader Inditex (ITX.MC), owner of Zara, also reported quarterly profits earlier this month above pre-pandemic levels. Read more
Helmerssom told analysts and the media that its situation remains complex in China, where the group is taking a hit following comments made in 2019 on workers’ rights in Xinjiang province.
Reporting by Anna Ringstrom, additional reporting by Helena Soderpalm; edited by Elaine Hardcastle and Jason Neely
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