// H&M expects to return to profitability
// Thanks to fewer discounted sales and strong cost control, it was able to emerge from the impact of Covid-19
H&M has said it expects to return to profitability as it recorded a stronger recovery from the Covid-19 pandemic than anticipated.
The Swedish giant forecast a pre-tax profit of about SKr2 billion (£180 million) in its third quarter, which runs from June to August.
H&M said that thanks to fewer discounted sales and strong cost control, it was able to emerge from the impact of the coronavirus lockdown.
At least four in five of H&M’s stores had closed during the peak of the pandemic.
By the end of August, about 200 of H&M’s 5000 stores were still closed due to coronavirus.
It recorded a pre-tax loss in its second quarter, which runs from March to May — of SKr6.5 billion (£58 million) from a profit of SKr5.9 billion (£52 million) a year earlier.
H&M’s sales have gradually recovered since April and in the third quarter its revenues fell 19 per cent compared with a year earlier.
The retailer said it has increased its online sales and improved flexibility in its supply chain in response to the pandemic. It also reduced rent bills and marketing costs.
It expects to close more physical stores this year than it will open new ones.
H&M suspended its dividend and cut its planned investments in half for 2020 as senior managers took a three-month pay cut of 20 per cent.
H&M will publish its full third-quarter results on October 1.