Swedish H&M, the world’s second-largest clothing retailer, announced a 46% decline on Friday in March, expecting a loss in the second fiscal quarter. The reason is the spreading coronavirus pandemic.
“With a dramatic downturn in the market, we have to make a lot of complex decisions and take decisive action,” said the new CEO of the network, Helena Helmersson
According to the company’s calculations, inventories decreased by a third of direct quarters, but the company said it expected a temporary increase due to the sudden decline in demand. While sales fell, online sales in March increased by 17%.
The impact not only on H&M, but most clothing retailers are temporarily closing most of their trades, which will see large redundancies in the long run, and for the first time since its listing on 1974, H&M will have to cancel its annual dividend.
The company also said that in the second quarter it expects to reduce operating costs without depreciation and amortization by approximately 20-25%, while lowering its planned capital expenditures for 2020 to SKK 5 billion from 8.5 billion.
Earnings before tax for the first quarter more than doubled to $ 2.50 billion ($ 247.6 million) compared to $ 1.04 billion last year. According to analysts, it was expected to increase to 1.47 billion crowns on average.
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