Börse Express – ROUNDUP: Textile retailer H&M is in the red due to corona pandemic

The Swedish fashion chain Hennes & Mauritz (H&M) posted a significant drop in the second quarter due to the Corona crisis. The group, which had had to close several thousand stores at times due to the pandemic, will now reduce its branch network worldwide by around 40 stores over the course of the year, as H&M announced in Stockholm on Friday.

In response to the news, shares of the Stockholm-listed company fell by almost 2.3 percent to around 145 Swedish kronor by noon. After the recovery from the Corona low until the beginning of June, this will bring it down to over 168 Swedish kronor. In March the valuation dropped to around 98 Swedish kronor after reaching 214 kronor at the end of January.

The second quarter of the financial year began in early March and ran until the end of May, spanning the previous heyday of the Corona crisis in Europe. In the period under review, the loss after tax was 4.9 billion Swedish kronor (470 million euros). In the same quarter of the previous year, H&M had made a profit of 4.5 billion Swedish kronor. Adjusted for special effects, the result was below the expectations of analysts.

Despite the burdens, the company claims that it has sufficient liquidity: at the end of May, the cash balance was SEK 12.7 billion.

According to the group, around 80 percent of H&M stores were tight in mid-April. While online business grew by almost a third in the entire quarter, as already known, total revenue fell by half compared to the same period in the previous year to 28.66 billion Swedish kronor (2.7 billion euros).

However, market experts were not very surprised by the numbers. The fashion company’s second quarter was as expected, said analyst Simon Irwin from the Swiss bank Credit Suisse. However, the low inventory was surprising. He stuck to his negative rating and did not change his target price of 132 Swedish kronor.

The US bank Goldman Sachs recently also continued to recommend selling the securities with a target price of 115 Swedish kronor. However, market expert Richard Edwards also saw positive developments in his first assessment. He praised the increasing use of data analysis to improve online business. Sales and profits could also rise sharply if the corona pandemic ended quickly.

When it comes to digitization, H&M wants to continue to accelerate to meet the rapidly changing customer requirements. This was accelerated by the pandemic.

Competitors like the Zara mother Inditex are already one step ahead of the Swedes. In response to the losses in the Corona crisis, CEO Pablo Isla now wants to spend another 900 million euros annually by 2022 for the corporate restructuring and expansion of online trading, it said at the beginning of June. Around one billion euros alone will flow into digitalization in the next three years. With this, the group continues its investments of the past years./ssc/knd/fba

 ISIN  SE0000106270  ES0148396007

AXC0174 2020-06-26 / 12: 41

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