The H&M group's sales in the period 1–24 June 2020 decreased by 25% in local currencies compared to the same period the previous year, according to the latest update from the company. Currently, 350 stores, representing 7% of the total number of stores, are still closed. A large number of stores still have local restrictions and limited opening hours. A total of 48 of the group’s 51 online markets are open.
The H&M group is continuing to take action to mitigate the Covid-19 situation. As the pandemic has speeded up the digital shift in the industry, the company’s transformation work relating to digitalisation, the supply chain and the organisation is being accelerated. The H&M group plans to establish an EMTN programme in July 2020 to allow the issue of bonds, primarily in EUR and SEK. This will complement the group’s long-term financing and is a way of further diversifying the group’s sources of financing. No decision has yet been taken on any first issue.
For full-year 2020 the pace of closures is being increased and the number of openings reduced compared with what was previously planned. Around 170 closures and around 130 openings are planned, resulting in a net decrease in the number of stores of around 40.
"I am full of admiration for our employees’ commitment, drive and perseverance during this very challenging time. As we have reopened our stores, sales have begun to recover at a faster rate than expected. To meet the rapid changes in customer behaviour caused by Covid-19 we are accelerating our digital development, optimising the store portfolio and further integrating the channels. With our ambitious sustainability work we want to continue to lead fashion retail towards a more sustainable future,” said Helena Helmersson, CEO. “Covid-19 continues to impact people, communities and companies around the world and I am full of admiration for our employees’ commitment, drive and perseverance during this very challenging time. The safety of our employees and customers remains our highest priority and we are reopening stores in line with decisions by the authorities. Before the pandemic hit, we performed strongly – a result of many years of long-term investments to create the best offering for our customers and to meet the digital shift in the industry. This, combined with the fact that we have acted quickly to counter the negative effects of Covid-19 and that we are speeding up the transformation of the H&M Group, makes me convinced that we will come out of the current crisis stronger. At most around 80% of our stores were closed in the second quarter and in those markets where stores were open, demand was significantly subdued. Although we took rapid and decisive action which reduced our costs considerably, it was impossible to compensate for the 50% drop in revenue and, as we had previously communicated, the quarter was loss-making.
During the pandemic, it became clear how important it is that the digital and physical channels interact to meet customers’ needs. When the majority of the stores were temporarily closed in the second quarter, we focused on redirecting product flow to our digital channels, which remained open at all times in nearly all our online markets. Online sales increased by 36% in SEK during the quarter. The positive development of online sales has continued since we began reopening our stores. As the stores have reopened, our total sales have gradually begun to recover. Our pace of recovery varies greatly between markets, partly because local restrictions differ, but has so far been better than expected. In the period 1–24 June 2020 sales decreased by 25% in local currencies compared with the same period in 2019. Although consumption generally remains subdued, our recovery as restrictions has been eased shows that our assortment is relevant and appreciated by our customers.
Rapid adjustments to product purchasing and buying plans meant that the stock-in-trade was able to be reduced somewhat in the second quarter compared with the previous year. However, since there is an oversupply of spring products throughout the industry, and the market remains weakened, we expect markdowns in relation to sales to increase again in the third quarter. We are continuing to adjust costs to mitigate the negative impact of the Covid-19 situation.
It is clear that the rapid changes in customer behaviour caused by the pandemic will further speed up the digitalisation of fashion retail. To meet this, we are continuing to adapt to the organisation and improve our ways of working, which will make us more flexible, fast and efficient. We are accelerating our digital development, optimising the store portfolio and further integrating the channels. Our leading sustainability work will also contribute to strengthening our position and ensure the long-term positive development of the H&M group.”