Shoppers Return to H&M Stores as COVID-19 Fears Subside

The lifting of quarantines and other pandemic-related restrictions across Europe and around the world led shoppers to return to the brick-and-mortar locations of fashion retailer H&M, giving the company a bigger-than-expected sales boost for the second quarter of fiscal 2022 from March 1 to May 31.

H&M joins rival Inditex in reporting a jump in foot traffic in its latest quarterly earnings report, although H&M’s bounce wasn’t quite as significant as that of Inditex. The company will give its full Q2 earnings report June 29, but teased a few high-level numbers in a Wednesday (June 15) press release.

H&M’s net sales were up 17% year-over-year to 54.5 billion crowns ($5.4 billion) in the quarter, still lower than 2019’s second quarter, when it topped 57.4 billion crowns but higher than the forecast of analysts polled by Refinitiv, who expected H&M to come in at 52.8 billion crowns, Reuters reported.

“Whilst in a less spectacular manner than Inditex last week, H&M also confirms today that the reopening process in Europe has led to strong demand conditions persisting in recent weeks,” analysts at Jefferies, who have a “hold” rating on H&M shares, said in a note to clients.

“Investors will be keen to better understand the extent to which price recovery is offsetting mounting input pressures and rebuilding costs,” they said.

Still, H&M shares are down about 25% this year and the company can’t touch Inditex’s 80% jump in quarterly profit.

In March, H&M reported quarterly profits below expectations amid high raw material and transportation costs and announced it would be raising prices to offset the cost hikes.

Related: Zara Limits Free Returns to In-Store Only, Reports No Impact on Sales

Several high-profile retailers are doing away with their free shipping, free returns policy for online orders because of rising expenses, inventory disruption and environmental impacts.

Zara, the biggest brand within the Inditex empire, is now charging customers the equivalent of $2 to $4 if they want to return items by mail. H&M and Uniqlo charge U.S. customers a $6 and $7 respective fee if they chose to make returns through the mail, versus bringing them into a store and doing so for free.