H&M, Inditex Sales Go Into Reverse as Europe Locks Down Again

Hennes & Mauritz AB and Zara owner Inditex SA both reported that an improvement in sales stalled in the autumn as a new round of Covid-19 lockdowns led consumers to curb spending on clothes.

From late October through November, H&M’s sales fell 22% from a year earlier, the Swedish retailer said Tuesday. Spanish rival Inditex reported a revenue decline of 19% in November and 13% in the first 10 days of December.

The pandemic has been a stress test for retailers around the world, revealing how strong their brick-and-mortar networks and e-commerce operations are. A return to lockdowns in Europe shows how brief and volatile the recovery has been. When governments lift restrictions, consumers often need garments for a new season rather than the ones that had been in stores. That has led Inditex’s sales to drop for nine consecutive months.

Conditions are worsening further in December in some markets as Germany reenters a strict lockdown in the middle of the vital Christmas shopping season. Localized restrictions have also been imposed in countries such as the U.K.

Shares of H&M fell as much as 3.2%, while Inditex fell as much as 2.3%.


The Spanish retailer said currently 8% of its stores are temporarily closed, and an additional 10% on weekends. Many also face restrictions on capacity and opening hours.

At H&M, revenue declined 10% in local-currency terms in its fourth quarter, which ran through November. The Swedish retailer said in October it will permanently close 250 stores on a net basis next year, reducing the total by 5%.

H&M had 130 stores temporarily closed as of Monday, down from as many as 1,100 in November. However, the company will soon shutter all stores in Germany and the Netherlands, Nils Vinge, investor-relations director, said by phone. He added it’s misleading to look only at the number of closures because there’s been a “sharp decline” in consumer traffic at stores that reopened but are under restrictions.

Inditex managed to reduce its stock-in-trade by 11% at the end of October, showing how its flexible purchasing agreements allow the company to quickly adapt to changes in demand.

The retailer said autumn/winter collections have been well received by customers.

“Inditex is dealing with a very complicated situation for the retail sector but it is showing very good cost control and margins, figures very closely watched by the market,” said Gonzalo Lardies, equities fund manager at Andbank Wealth Management Spain.

©2020 Bloomberg L.P.

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