An H&M warehouse at Magna Park, in Milton Keynes, Britain, on Sept. 26, 2021.Andrew Boyers/Reuters
Swedish fashion group H&M drew a line under the pandemic on Friday, reporting a bigger than expected jump in quarterly profit and hiking investments with the aim of doubling sales by 2030.
Shares in the world’s second-biggest clothing retailer leapt 5 per cent in early trade after it said it would double investments in 2022 to around 10-billion Swedish krona ($1.35-billion) to help achieve its new target.
Spending will focus on areas including technology, the supply chain, renewable energy and sustainable materials, it said.
“We ended the year strongly, with sales back at the same level as before the pandemic and with profitability better than it has been for several years,” CEO Helena Helmersson said.
“Now that we are back to a more normalized situation with a strong financial position and good profitability, we can fully focus on growth again.”
Pretax profit in September-November – H&M’s fiscal fourth quarter – leapt 64 per cent from a year earlier to 6-billion krona ($812-million). Analysts polled by Refinitiv had on average forecast a 5.43-billion krona ($735-million) profit.
“The strong result for the quarter is mainly a result of well-received collections with more full-price sales, lower markdowns and good cost control,” H&M said in a statement.
It said initiatives in recent years in technology and in making its supply chain more efficient mitigated the effects of disruptions in product supply.
Compared with the prepandemic fourth quarter of 2019, profit was up 43 per cent.
H&M, like its biggest rival Inditex, the owner of Zara, is bouncing back from the pandemic despite supply chain challenges.
The Swedish group proposed an ordinary dividend of 6.50 krona (87 cents) per share to be paid in two instalments, as well as a 3-billion krona ($405-million) share buyback program.
H&M said it now aims to double sales by 2030 compared with 2021 sales while at the same time halve its carbon footprint, and to reach an operating margin above 10 per cent by 2024.
In 2021, sales totalled 199 billion krona ($27-billion) and the operating margin was 7.7 per cent. Pretax profit totalled 14.3 billion krona ($1.93-billion) , against analysts’ mean forecast of 13.5-billion krona ($1.82-billion).
To help lower its carbon impact, H&M said it would no longer take supplies that use coal-based fuels.
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