Second corona wave: H&M and Zara record slump in sales

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Closed Zara branch in Mannheim (in March)

Photo: Uwe Anspach / dpa-Bildfunk

Large fashion chains have clearly felt the consequences of the second corona wave in recent months.

The sales of the Swedish group Hennes & Mauritz (H&M) and the Spanish competitor Inditex - owners of the fashion chains Zara, Bershka and Massimo Dutti - fell sharply, as both companies announced.

The bad news did not go unnoticed on the stock exchange: The H&M share slipped by around three percent in afternoon trading, and the Inditex shares by almost five percent.

At H&M, sales fell in the three months from September to the end of November compared to the same period in the previous year by around 15 percent to 52.5 billion Swedish kronor (around 5.1 billion euros).

Adjusted for currency effects, the decrease was 10 percent.

Competitor Inditex recorded a similarly large drop in sales of 14 percent to 6.1 billion euros between August and October, or 10 percent after adjusting for currency effects.

The vast majority of Inditex stores continue to suffer from corona restrictions such as sales area, opening times or capacity, it said.

Both companies would have temporarily benefited from a recovery.

However, this was lost again with the emergence of a second corona wave.

By the end of November, H&M sales had shrunk year-on-year by around a fifth to 187 billion crowns.

H&M plans to publish the detailed figures for the past fiscal year on January 29th.

At Inditex, sales of 14.1 billion euros in the first nine months of the financial year were almost 30 percent less than a year ago.

The bottom line was that the Spaniards' profits fell by three quarters to 671 million euros between February and October compared to the same period last year.

And earnings before interest, taxes, depreciation and amortization (Ebitda) continue to crumble: While it was 5.7 billion euros between February and October 2019, it is now only 3.3 billion euros.

Only online retail is growing

Jefferies analyst James Grzinic commented that Inditex's results showed a strong rebound in the weeks leading up to the second lockdown in Europe.

However, the immediate outlook has become even more uncertain due to the acceleration of the latest corona infections.

Richard Chamberlain from the analysis company RBC, however, emphasized that the operational business development of the textile retailer Inditex was slightly worse than expected.

At the same time, however, he praised the "very healthy cash holdings".

Due to the corona-related renewed store closings, the recovery of the stores could progress a little more slowly than is currently expected on the market.

Meanwhile, Inditex turned the focus to its online trading revenues.

These went up by 76 percent in the third quarter, and in the first nine months of the year management recorded a growth of 75 percent.

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dab / dpa