H&M flags higher prices after profit falls far short of expectations By Reuters

By Anna Ringstrom

STOCKHOLM (Reuters) -Sweden’s H&M stated on Thursday it will want to lift 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 vogue 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 had been closed by the pandemic.

In addition to lacking the common analyst forecast for a 1.0 billion crown revenue, the outcome 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 earnings for the quarter had been impacted by the damaging results of the pandemic in lots 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 modify our costs,” CEO Helena Helmersson informed Reuters. “We’ll elevate totally different product sorts in numerous nations relying on competitors and demand.”

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

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

Gross sales development 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 constantly,” 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 nations the place spring had arrived, vibrant garments specifically had been in demand.

Greatest rival Inditex (MC:), the proprietor of Zara, has weathered pandemic and world 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)