• Q4 profit after tax fell to SEK2.5bn from SEK4.2 a year earlier. Excluding IFRS 16, profit after tax amounted to SEK2.4bn, compared to SEK4.2bn last time.
  • Q4 net sales dropped 14.9% to SEK52.5bn (US$6.3m), from SEK61.7bn last year. In local currencies, net sales fell by 10%.
  • FY profit after tax tumbled to SEK1.2bn, from SEK13.4bn a year earlier.  
  • FY net sales were SEK187bn, down 19.7% from SEK232.8bn. In local currencies, net sales fell by 18%.
Online sales accounted for 28% of H&M Groups total sales in FY2019/20

Online sales accounted for 28% of H&M Group's total sales in FY2019/20

H&M's revenue and operating profit have been significantly affected by the Covid-19 pandemic as its online proposition proved unable to make up for lost store sales.

A maximum of 80% of stores were temporarily closed in its worst quarter – Q2 – though Q4 sales impressively returned to 2019 levels prior to the second wave of the virus.

AS H&M continues to play catch-up with its digital proposition, online sales accounted for 28% of the group's total sales in FY2019/20. Though this is a significant improvement versus the last financial year, H&M faces increasing competition in Europe and the US from players such as Asos and Zara as they hone their digital offers.

Demand has remained muted at the start of H&M's FY2020/21, with sales falling 23% in local currencies from 1 December 2020 to 27 January 2021 as up to 36% of stores were temporarily closed again, with limited interest being able to be driven by loungewear.

Despite this, the group stands to benefit from core brand H&M's value proposition in 2021 and beyond as consumers reel from the financial impacts of Covid-19. The brand is not resting on its value laurels though, as its latest designer collection with Simone Rocha will provide it with a unique offer and boost its fashion credentials.

The group's previous strategic plan of focusing on online, increasing the efficiency of its supply chain and the fine-tuning of its physical network was the right strategy, but if it had been put in place earlier it could have better mitigated the impacts of Covid-19.

Optimising its store estate will be key in FY2020/21, with a net 250 stores expected to close versus only 58 net closures in FY2019/20. The focus needs to be on elevating its remaining stores, as well as more closely associating them with one of H&M's other priorities: sustainability.

Though it sometimes comes under fire for greenwashing, H&M has benefitted from its strong stance on sustainability and ethics and will continue to do so. Its stores could be used to create sustainability hubs to boost its reputation and footfall, bringing together its innovations such as resale (Cos Resell launched in September 2020); Looop, its garment recycling system; and clothing repairs.