The Swedish clothing retailer Hennes & Mauritz AB (H&M) closed the first quarter of the 2021/22 financial year in the black, but clearly missed market expectations. After the publication of the current quarterly figures on Thursday, the share price temporarily fell by more than ten percent. In addition, the parent company of brands such as H&M, Cos, Monki, Weekday, & Other Stories and Arket acknowledged that the effects of the war in Ukraine are currently having a significant impact on sales development.
The group had already announced in mid-March that it was able to generate sales of 49.2 billion Swedish crowns (4.75 billion euros) in the months from December to February. This corresponded to an increase of 23 percent (currency-adjusted +18 percent) compared to the same quarter of the previous year.
However, the full results for the first quarter, which the company has now presented, fell well short of the analysts’ forecasts. Although the group, which suffered a loss of 1.07 billion Swedish crowns in the same period last year, was able to achieve a net profit of 217 million Swedish kronor (21 million euros), market expectations had averaged 1.04 billion Swedish kronor. The company explained that higher freight costs, the ongoing consequences of the Covid-19 pandemic and increased investments in strengthening the supply chain and expanding technology capacities weighed on earnings in the first quarter.
The economic effects of the war in Ukraine also became apparent in the first few weeks of the second quarter. In the period from March 1st to March 28th, currency-adjusted sales were six percent above the corresponding level of the previous year, explained Hennes & Mauritz. However, the temporary cessation of all business activities in Russia, Ukraine and Belarus, which according to the company affects a total of 185 branches, slowed down growth considerably: Adjusted for this factor, currency-adjusted revenues would have increased by eleven percent, the company said. In addition, 42 branches in other markets are currently temporarily closed as a result of the corona pandemic.