H&M looks beyond pandemic with drive to double sales by 2030

By Anna Ringstrom

STOCKHOLM (Reuters) -Swedish fashion group H&M drew a line under the pandemic on Friday, reporting a bigger than expected jump in quarterly profit and hiking investments with the aim of doubling sales by 2030.

Shares in the world’s second-biggest clothing retailer leapt 5% in early trade after it said it would double investments in 2022 to around 10 billion Swedish crowns ($1.1 billion) to help achieve its new target.

Spending will focus on areas including technology, the supply chain, renewable energy and sustainable materials, it said.

“We ended the year strongly, with sales back at the same level as before the pandemic and with profitability better than it has been for several years,” CEO Helena Helmersson said.

“Now that we are back to a more normalised situation with a strong financial position and good profitability, we can fully focus on growth again.”

Pretax profit in September-November – H&M’s fiscal fourth quarter – leapt 64% from a year earlier to 6.00 billion crowns ($640 million). Analysts polled by Refinitiv had on average forecast a 5.43 billion crown profit.

“The strong result for the quarter is mainly a result of well-received collections with more full-price sales, lower mark-downs and good cost control,” H&M said in a statement.

It said initiatives in recent years in technology and in making its supply chain more efficient mitigated the effects of disruptions in product supply.

Compared with the pre-pandemic fourth quarter of 2019, profit was up 43%.

H&M, like its biggest rival Inditex (MC:ITX), the owner of Zara, is bouncing back from the pandemic despite supply chain challenges.

The Swedish group proposed an ordinary dividend of 6.50 crowns per share to be paid in two instalments, as well as a 3 billion crown share buy-back programme.

H&M said it now aimed to double sales by 2030 compared with 2021 sales while at the same time halve its carbon footprint, and to reach an operating margin above 10% by 2024.

In 2021, sales totalled 199 billion crowns and the operating margin was 7.7%. Pretax profit totalled 14.3 billion crowns, against analysts’ mean forecast of 13.5 billion.

To help lower its carbon impact, H&M said it would no longer take supplies that use coal-based fuels.

($1 = 9.4194 Swedish crowns)