H&M's sales still lag pre-pandemic levels as restrictions bite

© Reuters. FILE PHOTO: The H&M clothing store is seen in Times Square in Manhattan, New York, U.S., November 15, 2019. REUTERS/Mike Segar/File Photo

By Anna Ringstrom

STOCKHOLM (Reuters) -Sales at fashion retailer H&M grew less than expected in the three months to the end of August, staying below pre-pandemic levels as restrictions kept shoppers away from stores.

The Swedish group said on Wednesday sales grew 9% from a year earlier, or 14% in local currency terms, to 55.6 billion crowns ($6.46 billion). Analysts polled by Refinitiv on average forecast net sales growth of 14%.

Net sales at the world's second biggest fashion retailer were down 11% from the same quarter of 2019 before the pandemic, when they were 62.6 billion crowns.

H&M, whose shares were down 3% in early trade, said the pandemic continued to hit sales, with considerable variation between markets.

"Lockdowns and restrictions have continued to hamper development, particularly in Asia. However, as restrictions have been eased, sales in store have picked up in many markets while online sales have continued to increase," it said.

H&M returned to profit in its April-June quarter from a loss a year earlier due to the pandemic, with sales 4% higher than in 2019. But sales slowed towards the end of the quarter.

H&M's recovery has lagged market leader Inditex (MC:ITX), the owner of Zara, which on Wednesday reported a 7% rise in May-July sales compared to the same period in 2019.

H&M, which is due to publish its full fiscal third-quarter earnings report on Sept. 30, said its recovery continued with more full-price sales and good cost control.

It said about 100 stores were temporarily closed at the end of the quarter, down from about 180 at the start, with continued restrictions in most markets resulting in reduced footfall.

($1 = 8.6130 Swedish crowns)