H&M Expects to Post Loss for 2Q After March Sales Fell 46% on Year
April 03 2020 - 3:03AM
Dow Jones News
By Dominic Chopping
STOCKHOLM--Hennes & Mauritz AB (HM-B.SK) said Friday that it
expects to post a fiscal second-quarter loss as the substantial
drop in sales from global store closures won't be offset by
operating cost cuts.
The coronavirus pandemic has forced the Swedish fashion retailer
to close 3,778 of its 5,065 stores as of the end of March, with
sales last month falling 46% on the year.
It has reduced working hours for tens of thousands of employees,
implemented temporary lay-offs and is reviewing the need for
redundancies. The measures cover all areas of the business but
H&M said it can't give an exact number of employees
impacted.
Senior executives have taken a temporary 20% pay cut.
It has already cancelled its 2019 dividend to free up 16 billion
Swedish kronor ($1.59 billion) but has taken further measures to
improve liquidity, including starting rental negotiations with its
landlords, scaling back capital expenditure by SEK3.5 billion, and
it plans to expand credit facilities.
"The situation we find ourselves in cannot be compared with
anything we have ever experienced before," said Chief Executive
Helena Helmersson.
"We believe that the major changes in consumer behavior we are
now seeing will further increase the digitalization of society as
well as the focus on sustainability."
The company posted a net profit of SEK1.93 billion for the
quarter ended Feb. 28 compared with SEK803 million a year earlier.
Analysts polled by FactSet had expected a profit of SEK1.1
billion.
Sales rose to SEK54.95 billion from SEK51.02 billion, as
previously announced.
Write to Dominic Chopping at dominic.chopping@wsj.com
(END) Dow Jones Newswires
April 03, 2020 02:48 ET (06:48 GMT)
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