Global fashion retailer H&M had warned its preliminary third-quarter results may well be below that of the previous corresponding period – but it beat profit forecasts and has recovered much faster than expected.
The company’s pre-tax profit for the quarter to August 31 was US$227.3 million, well below the $570 million from the previous corresponding period. H&M attributed the success to selling more goods at full-price, combined with strong cost controls.
“As a result of appreciated collections together with rapid and decisive actions, the H&M group’s recovery is better than expected,” the retailer said in a statement.
For the period, H&M group’s net sales decreased by 16 per cent in local currencies compared with the corresponding period last year.
The company said the improving sales through the quarter reflected the Covid-19 situation: at the beginning of the quarter about 900 of the group’s more than 5000 stores were temporarily closed. At the end of the quarter, the other stores had reopened and only about 200 stores remained temporarily closed.
The final results for the third quarter will be published on October 1.
Meanwhile, the company denied it had any ties with a Chinese yarn producer over accusations of “forced labour” that involves ethnic and religious minorities from China’s Xinjiang province, according to a report by Channel News Asia.
The report stated the fashion retailer specified it didn’t work with any garment factories in the area and would no longer source cotton from Xinjiang, China’s largest cotton growing region.