H&M warns on Q1 sales after annual profit plummets

STOCKHOLM (Reuters) – H&M reported an 88% fall in profit for the year through November on Friday and warned the pandemic was still hitting sales at the world’s second-biggest fashion group.

The Swedish fashion retailer said its full-year pretax profit fell to 2.05 billion Swedish crowns ($245.29 million) from 17.4 billion, hurt by restrictions and lockdowns.

In its final quarter, profit fell to 3.67 billion crowns from 5.40 billion, less than expected, helped by large cost cuts. That beat the 3.07 billion expected by analysts polled by Refinitiv.

H&M had already reported a 10% fall in sales for the fourth quarter.

“The ongoing restrictions, along with the many temporary store closures, will have a substantial negative impact on the first quarter,” CEO Helena Helmersson said.

“However, it is clear that when customers have opportunity to shop – online and in certain markets with lesser restrictions – they are showing that the collections are appreciated,” she said in a statement.

Sales in December through Jan. 27, the first two months of its first quarter, were down 23% in local currencies.

Up to a third of H&M’s around 5,000 stores were temporarily closed in the period.

The company said due to uncertainty, its board would come back later with a proposed date and level for resuming H&M’s dividend. H&M did not pay a dividend for 2019.

(Reporting by Anna Ringstrom; editing by Niklas Pollard and Jason Neely)