H&M is back on track.
As fast fashion hits a snag with Forever 21’s recent bankruptcy filing, its rival retailer served as a bright spot for the sector with its first quarterly earnings gain in two years.
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The Swedish-based company posted better-than-expected profits that rose 25% to 5.01 billion krona (or $509.3 million) and sales that climbed 12% to 62.57 billion krona (or $6.36 billion) a glowing report that comes after many months of mounting inventory and heavy promotions that led to declining bottom lines.
The results, according to CEO Karl-Johan Persson, were largely driven by the brand’s well-received summer collections and reduced markdowns, coupled with e-commerce’s boost of 30%, logistical improvements and further integration of its online and physical channels.
“The new season has got off to a promising start, with a positive reception for our early autumn collections,” the exec said in a statement. “We are on the right track with our transformation work to meet customers’ ever-increasing expectations.”
The fashion giant’s glowing report comes at a tough time for retail, which has seen widespread store closures this year as well as the bankruptcies of luxury department store chain Barneys New York and H&M competitor Forever 21. Over the weekend, the latter filed for Chapter 11 protection and announced plans to close up to 178 of its 500-plus outposts across the United States, as well as exit most of its locations in Asia and Europe.
On the other hand, H&M has managed to increase sales in the U.S. by 19% while offering fewer discounts. It has also been optimizing its store opening plan and expanding in emerging markets.
“Looking ahead, we remain humbled considering the rapid shift in the fashion retail world and the challenges it brings,” Persson added during the firm’s conference call with investors. “Our transformation work will therefore continue at a fast pace in all parts of the company, included continued upgrades in the supply chain. We are convinced that this will contribute to positive development for the H&M group for many years to come.”
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