STOCKHOLM: Swedish retail giant H&M had a strong start to the year but like many others it expects a rough second quarter owing to the Covid-19 crisis, it said Friday.
The clothing company’s net profit from December 2019 to February jumped to 1.9 billion kronor (US$190 million), from 803 million kronor in the same period a year earlier.
Sales meanwhile gained 7.7% to 54 billion kronor, H&M said in a statement.
That said, “with each day that we are having to keep stores closed, the situation is becoming increasingly demanding,” the company noted.
“In the second half of the quarter the group’s sales were muted by the rapid outbreak of coronavirus, particularly in China where sales decreased by 84% in February.”
H&M has now closed around three-quarters of its stores worldwide.
“The second quarter will naturally be very negatively impacted by the corona situation and will therefore be loss-making,” the group warned.
Shares in the retailer nonetheless jumped by 4.7% to 120.55 kronor on the Stockholm stock exchange, which was 0.3% lower overall.
H&M said it has begun to reduce workers’ hours in markets hit by Covid-19, noting that it would “affect tens of thousands of employees in all parts of the business.”
A precise number could not be determined at this point however.
Meanwhile, “senior executives have taken a temporary 20% pay cut,” the company said.
Sweden has not declared a national lockdown to deal with the novel coronavirus outbreak, which has infected around 5,500 people and killed almost 300 there.