H&M flags larger costs after revenue falls far wanting expectations By Reuters

© Reuters. FILE PHOTO: A lady is mirrored subsequent to the brand of the H&M trend retailer within the newly opened Mall of Berlin purchasing centre in Berlin, Germany, on this September 25, 2014 file photograph. REUTERS/Thomas Peter

By Anna Ringstrom

STOCKHOLM (Reuters) -Sweden’s H&M stated on Thursday it will want to boost costs this yr because it reported a December-February revenue sharply beneath expectations amid excessive uncooked materials and transportation prices.

The world’s second-biggest trend retailer swung to a pretax revenue of 282 million crowns ($30.5 million) in its first quarter from a 1.4 billion loss a yr earlier when almost half of its shops have been closed by the pandemic.

In addition to lacking the common analyst forecast for a 1.0 billion crown revenue, the end result was additionally far beneath the two.5 billion crowns reached within the pre-pandemic first quarter of 2020, sending H&M’s shares down 10% by 1130 GMT.

“Gross sales and income for the quarter have been impacted by the adverse results of the pandemic in most of the group’s main markets,” H&M stated in a press release, citing provide chain disruptions and delays, and a brand new wave of COVID-19 in some markets.

Elevated know-how and provide chain associated investments additionally weighed.

“Taking a look at inflation it is primarily uncooked materials and transportation prices that have an effect on us and we see, as do many others, that we have to regulate our costs,” CEO Helena Helmersson informed Reuters. “We’ll elevate totally different product varieties in numerous international locations relying on competitors and demand.”

The plan was for value hikes to be smaller than rivals’, and never have an effect on primary clothes ranges, she stated in an interview.

First-quarter gross sales have been up 18% year-on-year in native currencies, H&M reported earlier, however nonetheless down from two years in the past.

Gross sales progress within the March 1-28 interval slowed considerably from the primary quarter, to six% in native currencies.

Excluding Russia, Belarus and Ukraine, the place H&M has briefly closed shops, the March improve was 11%. Russia final yr accounted for 4% of group gross sales.

“There’s a continued uncertainty regarding developments and the corporate is monitoring and evaluating the scenario repeatedly,” H&M stated on the Ukraine disaster.

H&M stated its collections had been nicely obtained within the first quarter, resulting in a better share of full-price gross sales than a yr earlier, in addition to in March. Helmersson stated that in international locations the place spring had arrived, vibrant garments particularly have been in demand.

Largest rival Inditex (MC:), the proprietor of Zara, has weathered pandemic and international provide chain disruptions higher than H&M. It grew gross sales 33% year-on-year, and 21% from the identical interval in 2019, within the six weeks from Feb. 1.

($1 = 9.2620 Swedish crowns)