H&M Reinstates Dividend As Profits Above Pre-pandemic Level

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The group announced that 50 of its 5,000 stores currently remain temporarily closed. (Photo: Getty Images)

Swedish retailer Hennes & Mauritz (HM-B.ST) reinstated its dividend after earnings exceeded expectations and exceeded pre-pandemic levels.

The clothing chain, which is the second-largest in the world, reported a 158% increase in its third-quarter pre-tax profit to 6.09 billion crowns (£ 512 million, $ 690 million).

This is an increase of 22% compared to the same quarter in 2019, before the start of the health crisis. He cited more full-price sales, lower markdowns and good cost control as the drivers of the strong performance.

The group added that around 50 of its 5,000 stores were currently temporarily closed, up from 180 in early June.

H&M proposed to pay a dividend for 2020 in November, 18 months after its suspension, of 6.50 kr per share.

H&M shares were down slightly on Thursday.  Chart: Yahoo Finance

H&M shares were down slightly on Thursday. Chart: Yahoo Finance

However, supply disruptions hampered September sales, the company said on Thursday, with shortages of goods, as well as containers, storage and drivers.

H&M said this has led to a sharp increase in shipping costs, with bottlenecks affecting the business primarily in production, transportation and ports. Cotton prices have also increased due to strong Chinese demand.

“September 2021 sales were slightly higher than the corresponding month of the previous year in local currencies, although demand could not be fully met due to disruptions and delays in the flow of products,” H&M said.

He expects more delivery delays in the current quarter.

Read more: UK service sector growth slows due to staff shortages and supply chain disruptions

The increase in consumer spending after the first wave of COVID-19 in Europe, the United States and Asia has benefited the company, however, it lags behind Inditex, the Spanish owner of Zara, which is the world’s largest clothing retailer.

Earlier this month, Inditex said sales accelerated from May through July to € 6.99 billion (£ 6.02 billion, $ 8.1 billion), or 7% more than during the same period in 2019, as shoppers resumed shopping for clothes for summer social events. .

Watch: H&M Profits Rise To Pre-Crisis Levels


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