H&M has revealed the extent of damage coronavirus has had on its business, with profit crashing 88% to SEK 2.05bn (£179m) in its full-year results, down from SEK 17.4bn (£1.5bn) the year before.
In the full-year ended 30 November 2020, net sales also fell by 18% to SEK 187bn (£16.3bn), as sales development was “significantly and negatively” affected by the pandemic, particularly in the second quarter when stores were temporarily closed in most markets. At the height of closures, approximately 80% of the group’s stores were closed.
Its fourth quarter of trading saw a slight recovery in reading, however, with sales down by only 10% to SEK 53bn (£4.6bn) in the three months ended 30 November 2020.
Nonetheless, as a result of the second wave of the pandemic and ongoing closures, and with 36% of its stores once again closed, sales have fallen 23% between 1 December 2020 and 27 January 2021 against the prior year.
The group noted that it has “rapidly” implemented a series of measures to mitigate the effects of the pandemic, however, with this “crisis work” reportedly covering product purchasing, investments, rents, staffing and financing.
In addition, the group said it has focused more on its digital channels, which helped to partly compensate for the drop in in-store sales last year.
Looking ahead, H&M noted its financial position remains “strong” with good liquidity, and at present its board’s assessment is that there are “good prospects” of a cash dividend in autumn 2021.
Online and physical stores are being increasingly integrated, and around 100 new stores are planned to open this year. Nonetheless, 350 stores are planned to close in the same period, mainly in established markets.
CEO Helena Helmersson said: “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.”
She added: “We are continuing our initiatives for digital growth, integration of the channels and optimisation of the store portfolio. Speed and flexibility will be even more important going forward, particularly in the supply chain, to ensure the best customer offering and increase availability in all channels.
“Our key focus remains on developing strong, unique brands in order to always offer the best combination of fashion, quality, price and sustainability. Together with our transformation initiatives this will help increase our resilience and adaptability and will contribute to sustainable and profitable growth for the H&M group.”