H&M Group, 03 February: Showing a weak sale, H&M Group’s Q4 report earlier on Friday said that there are big profit falls, however, expecting a way through after a tough September- November quarter. Having a weak sale range of being down to 23% from December to January 27, it said that the current situation of the pandemic would continue hurting the fiscal first quarter of the year.
H&M is a well-known Swedish multinational clothing retail company operating in over 74 countries currently, however, its operations got disturbed like every other thing due to the covid pandemic. The overall reduced profit margin has led to the fast-fashion giant closing stores in India while their primary focus remains on online shopping triggered during the pandemic period.
Talking about the scenario, Emily Salter at GlobalData said, “It’s continuing to play catch-up with its digital proposition, [as] online sales accounted for 28% of the group’s total sales in FY2019/20.” Further, she added, “It faces increasing competition in Europe and the US from players such as ASOS and Zara as they hone their digital offers. The group’s previous strategic plan of focusing on online, increasing the efficiency of its supply chain and the fine-tuning of its physical network was the right strategy, but if it had been put in place earlier it could have better mitigated the impacts of Covid-19.”
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“Optimising its store estate will be key in FY2020/21, with a net 250 stores expected to close versus only 58 net closures in FY2019/20. The focus needs to be on elevating its remaining stores, as well as more closely associating them with one of H&M’s other priorities: sustainability”.
CEO Helena Helmersson quoted, “With strong, profitable online growth and good cost control we succeeded in ending the year in profit and with a strong financial position. Taking decisive measures quickly, combined with an attractive customer offering, led to a better recovery than expected up until the second wave of the pandemic struck. Our measures to mitigate the negative effects of ongoing restrictions and closures are continuing. Although the situation at the time of writing is highly challenging, the H&M group stands strong.”
