HandM profits return post strong second quarter due to the reopening of stores and the pull of online: sales in June already point to prepandemic levels - H & M returns to profitability and moves forward.

Sales of the Swedish textile group Hennes and Mauritz grew by 75% in its second fiscal quarter (from March to May) to 46,509 million Swedish kronor (4,607 million euros), according to the results report presented on Thursday.

In the first 6 months of the year, the increase in sales has been 12%, reaching 86,569 million Swedish kronor (8,535 million euros) in global terms. The rise was similar in the Spanish market, with an increase of 10% to 2,534 million kroner (250 million euros).

HandM profits return post strong second quarter

The strong rise is largely due to results being compared to a period when sales plummeted in 2020, making the improvement more evident. On the other hand, when compared to the second quarter of 2019 (57,474 million Swedish kronor), the turnover is still slightly below.

In the second quarter of 2020 –during the hardest months of the pandemic–, the textile group's sales fell by 50%, to 28,664 million Swedish kronor (2,718 million euros). The chain closed up to 80% of its then 5,000 stores, which it could not compensate with the sharp increase in online sales of 36%.

During this period, online sales have continued to show good behavior, with a growth of 40%. In the last 3 months, H & M opened its online business in Qatar, Indonesia, Philippines, Malaysia and Singapore.

According to the group in the report, online sales have continued to evolve very well, even when stores have been allowed to reopen.

HandM profits return post strong second quarter

However, the development of sales has been affected by the uneven development of the pandemic in different markets. In fact, at the start of the second quarter some 1,300 stores were still closed, while those that remained open were subject to different restrictions.

From the Swedish company detail that as vaccination advances, several markets of the group have allowed the gradual reopening of their stores, and has brought with it "a strong recovery". As of 1 July, the group had temporarily closed around 95 stores (at the end of the second quarter there were still 140).

In spite of everything, if you look at sales from 1 to 28 June, these rebounded by 25%, compared to the same period in 2020, although, they point out, sales continue to be affected by the reduction in the influx of public as a result of continuous restrictions and the closure of stores. Although at the beginning of June sales already exceeded those of June 2019, a month later there has been a slight fall of 4%.

HandM profits return post strong second quarter: "We have almost recovered to the level we had before the pandemic. The crisis has made us even stronger as a company. The lessons we have learned allow us to be even better and faster when it comes to taking advantage of new opportunities, and we are optimistic about the future," explains Helena Helmersson, CEO of the company, in the results press release.

On the other hand, gross profit between March and May increased by 89%, to SEK 25,049 million (EUR 2,468 million), compared to SEK 13,284 million (EUR 1,309 million) a year ago. This corresponds to a gross margin of 53.9% - which was 46.3% in the same period in 2020.

After taxes, this profit amounted to 2,767 million Swedish kronor (272.58 million euros), while from March to May 2020, the figure was a loss of 4,991 million Swedish kronor (-491.6 million euros) due to the situation arising from the pandemic.

HandM profits return post strong second quarter

In the first half of this year, the group's profit after tax amounted to SEK 1,697 million (EUR 167.3 million). In addition, stocks decreased to 35,866 million Swedish kronor (3,533 million euros), from 40,000 million in 2020.

H & M's customer loyalty program now has approximately 130 million members in 27 markets, an increase of 50 million members in one year.

HandM profits return post strong second quarter: The bite of COVID-19 caused the group to reconsider the role of its stores and make the decision to open 100 points and undertake the closure of 350 worldwide in 2021, 30 of them in Spain. This decision resulted in an ERE that would affect a maximum of 1,100 workers. After a pre-agreement with the unions, the figure has been reduced to 349 layoffs.

The company justifies the operation by the" great change " that the retail industry is experiencing as a result of digitalization, the modification of consumer behavior and the "constant" growth of the online channel.

Currently, the Swedish group has 4,950 stores in 74 markets-108 stores less than the same period in 2020– and now, its workforce reaches 153,000 employees.

HandM profits return post strong second quarter

More news:

Historical maximum number of public employees due to the impact of the pandemic: the workforce of the administrations grows by 4% in a year and exceeds 2.7 million workers

Since the start of the pandemic of coronavirus, the employment has been one of the aspects of the economy that has suffered its impact, which has led to an unprecedented effort from the public sector to support private sector activity, with both aid and incentive measures for companies, freelancers and smes as facilitating the temporary suspension of employment through the ERTE.

However, the pandemic has also caused the authorities have increased its workforce to strengthen their services directly related to the health emergency, as is the case of the public health system, or that have had to adapt fully operational to prevent the spread of coronavirus, as in the case of education, the State Public Employment Service (SEPE) or Social Security.

In particular, the number of public workers has reached its peak of the last 2 decades in January 2021, standing at 2.7 million people, representing 12,000 more public employees than those registered in January 2010, which marked its historic ceiling until now. Thus, throughout 2020 the workforce of public services has increased by 112,700 workers, 4.15% more than in January last year, according to figures from the Ministry of Public Service collected by the Country.

Most of this increase in the workforce of the public administrations corresponds to public health and education, which are autonomous competence, so that, of the 1.6 million public employees that the communities had during the first half of 2021, 37.8% correspond to non-university education and another 35.1% to the health sector.

By levels of administration, are precisely the regions and the municipalities that have increased their templates, registering an increase of the 113,000 workers, of which more than 80% belong to the communities, while the total number of workers of the state administration, which accumulate less competences that have been affected by the pandemic, has been reduced by more than 1,400 employees.

In addition, the weight of public employees in employment in general is very prominent in communities such as Extremadura, where they account for 1 in 2 people with employment, Aragon or Cantabria, where the proportion is around 42% of the total active population, although they are the 3 most populated communities, Andalusia, Catalonia and Madrid, which accumulate more public workers, with between 200,000 and 300,000, according to the newspaper of the Prisa Group.

On the other hand, the increase of the template of the public services has also led to an increase in temporary employment now exceeds 30% of the total number of public employees after picking up nearly 4 percentage points in the last year and to reach their full historical, 3 points above the levels reached during the previous crisis, and 2 points more than its previous record of temporary contracts, which reached in the second quarter of 2019.

However, the impact of temporality is uneven, since the state administration, an average of 10% of temporary contracts and the local councils 13%, so that the communities that recorded a higher rate of temporality in its workforce public, which has prompted the European Union requires the Government to act to reduce the precariousness of employment and to limit the temporary employment, especially in the case of the caretaker.