Shares of Hennes & Mauritz fell on Friday as the Swedish retailer reported a tough second quarter. It swung to a loss and sales fell sharply due to the pandemic, which forced it to close nearly all stores at the worst of the coronavirus lockdown.
H&M HM.B, -1.93% shares fell 3.4%. Down 26% year to date, shares have recovered about 9% this quarter.
The retailer said pretax losses surged to SEK6.48 billion ($695 million) from SEK5.93 billion in same period a year earlier. On a per share basis, the loss was SEK3.02, slightly less than the SEK3.04 expected, according to a survey of analysts at FactSet.
Sales fell to SEK28.66 billion from SEK57.47 billion a year ago, a figure that met expectations. But the retailer sales in the period 1–24 June 2020 decreased by 25% in local currencies compared with the same period the previous year, which would be an improvement on that 50% drop.
And online sales rose 32%. “The positive development of online sales has continued since we began reopening our stores. As the stores have reopened, our total sales have gradually begun to recover,” said Helena Helmersson, H&M Chief Executive, in a release.
Analysts at Citigroup noted that a gross margin decline of 900 basis points year over year came in “significantly below consensus of a drop of 640 basis points.” They said that may be seen as a concern to investors.