H&M sees full-year profits drop 88%

The H&M Group has recorded a drop in full-year profits and sales as the full impact of the COVID-19 pandemic is revealed, with profits falling 88.2% to £174.4 million.

Sales development was significantly negatively affected by the pandemic, particularly in the second quarter when stores were temporarily closed in most markets; at the most, approximately 80% of the group’s stores were closed.

Gross profit for the year reached £8.16 billion, falling from £10.68 billion in 2019.

Profit after financial items amounted to £178.9 million, with profit after tax amounting to £108.37 million, a dramatic fall from £1.17 billion in 2019.

The retailer reported a “strong recovery” at the start of Q4 but said that this was “significantly slowed” when the second wave of the virus led to more restrictions and lockdowns across markets.

Helena Helmersson, H&M Group CEO commented:  “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. The recent years’ transformation initiatives and investments, focusing on the digital, have been especially important for managing the crisis and this work is continuing at full speed.

"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. 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.”