PARIS — Feeling the full brunt of disruption from the coronavirus, H&M group’s sales plummeted 57 percent in local currencies from March 1 to May 6, when the vast majority of stores were ordered shut across Europe and the U.S.
The Swedish fast-fashion retailer, which owns labels Cos, Monki, & Other Stories along with H&M, offered a trading update Thursday, following the gradual reopening of some markets from the end of April.
Business has been muted in recently-opened markets, where social distancing rules are being followed, the company said. Online sales, meanwhile, have increased in the March to May 6 period by 32 percent.
Sales in Germany fell 46 percent over the period, while the drops were much steeper, more than 70 percent, in the U.S., Spain, France and Italy. In China, the decline was 32 percent.
There are currently 3,050 H&M group stores temporarily closed, around 60 percent of the group’s sprawling network, marking a gradual easing after 80 percent were closed in mid-March.
The group is guiding for lower costs for markdowns in the second quarter than in the second quarter of last year but with likely lower sales, the markdowns are expected to have a negative effect on the gross margin of between 2 and 4 percentage points.
Operating expenses excluding depreciation and amortization will be reduced by between 20 and 25 percent in the second quarter, H&M said. The company has said it expects the second quarter to be loss-making as efforts to rein back costs related to purchasing, investments, staffing and rents will not be enough to compensate for the steep sales declines.
The company said it has unused credit facilities totaling 23.8 billion Swedish kronor, or $2.42 billion, but that it is working on securing more.
“The group’s work is focused on ensuring financial flexibility and freedom of action on the best possible terms in a challenging market where business opportunities are also arising,” said the H&M group.