Stockholm Jan. 28 (BUS): Swedish fashion group H&M (HMb.ST) drew a line under the pandemic on Friday, posting a bigger-than-expected jump in quarterly profits and increased investment with a goal of doubling sales by 2030.
Shares in the world’s second-largest apparel retailer jumped 5% in early trading after it said it would double its investment in 2022 to about 10 billion Swedish crowns ($1.1 billion) to help meet its new target.
She said spending would focus on areas including technology, supply chain, renewable energy and sustainable materials.
“We finished the year strong, with sales back to the same level they were before the pandemic and better profitability than they have been for several years,” Helmersson CEO Helena Helmersson said.
“Now that we are back to a more normal position with a strong financial position and good profitability, we can fully focus on growing again.”
Pre-tax profit in September and November – H&M’s fiscal fourth quarter – jumped 64% from a year earlier to 6.00 billion crowns ($640 million). Analysts polled by Refinitiv had forecast an average of 5.43 billion kronor profit.
“The strong result for the quarter is primarily the result of well-received collections with more sales at full price, lower profit margins and better cost control,” H&M said in a statement.
She said that initiatives in recent years in technology and in making the supply chain more efficient have mitigated the effects of disruptions in the supply of products.
Compared to the last quarter of 2019 before the pandemic, profits are up 43%.
H&M, like its top rival Inditex, owner of Zara, is recovering from the pandemic despite supply chain challenges.
The Swedish group has proposed an ordinary dividend of 6.50 kroner per share to be paid in two installments, as well as a share buyback program of 3 billion kroner.
H&M said it now aims to double sales by 2030 compared to 2021 sales while halving carbon emissions, and to reach an operating margin above 10% by 2024.
In 2021, total sales amounted to 199 billion kroner and an operating margin of 7.7%. Pre-tax profit totaled 14.3 billion crowns, against analysts’ average forecast of 13.5 billion.
To help reduce the carbon footprint, H&M said it will no longer take supplies that use coal-based fuels.
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