H&M sales accelerate as pandemic rebound continues

The retailer told shareholders that net sales increased by 23% to 49.2 billion Swedish krona (£3.9 billion) over the three months to February.

A branch of H&M on Oxford Street, central London (Yui Mok/PA) (PA Archive)

Fashion giant H&M has revealed that sales have accelerated over the past three months as it rebounds from the impact of the pandemic.

The retailer told shareholders that net sales increased by 23% to 49.2 billion Swedish krona (£3.9 billion) over the three months to the end of February.

The Swedish group however saw shares drop as investors and analysts continued to worry about the potential impact of the conflict in Ukraine.

Earlier this month, H&M suspended all its sales in Russia due to the invasion although it did not clarify the financial impact of this decision in its latest update.

James Grzinic, equity analyst at Jefferies, said he expects revenues in Ukraine and Russia to drop by two thirds for the current financial year as a result.

He said he expects a “gradual recovery thereafter”.

“Russia’s invasion of Ukraine has resulted in increased uncertainty for short-term and mid-term prospects for the industry and for H&M,” he added.

“The persistence of accelerating levels of inflation will be a critical swing factor in the weeks ahead.”

Analysts also said the latest sales growth also highlights a slight slowdown in February, which rose by around 14% on an organic bases, compared with stronger growth in the previous two months.

RBC analyst Richard Chamberlain said that he expects profit estimates for the retailer to drop by 10% for this year and next year, due to the impact of Russia closures and potential impacts elsewhere in central and eastern Europe.