H&M sold 21 per cent less in the past quarter and dropped into the red. The fashion group also has to cope with Chinese pressure, following concerns regarding forced labour by the Uighur Muslim minority for multiple clothing brands.
In the red
Although March - naturally - looked much better than last year (+55 per cent), it was a weak quarter for H&M Group due to the ongoing Covid measures. Sales fell by 21 per cent to 40 billion Swedish kronor (3.9 billion euros), at least in local exchange rates.
The fashion giant also recorded a pre-tax loss of 1.39 billion kronor (140 million euros) for the period from December to February. A year earlier, there was still a profit of 2.5 billion kronor (240 million euros). Analysts, however, expected the company to do worse and had predicted a loss of 1.41 billion kronor.
Chinese ties are still strong
H&M's biggest concern at the moment is the Chinese boycott, which has come out of thin air. As early as a year ago, NGOs raised the issue that the Uighurs, an Islamic minority group who is being forced to learn "Chinese values" in re-education camps, are also required to make clothes for many major Western brands in the region of Xinjiang. These brands include H&M, which subsequently ended its cooperation with a particular supplier and with the region - albeit in a one-year phase-out scenario.
As political tensions between China and the West are rising again, furious calls for a boycott of the brand have recently appeared on Chinese social media. Several Chinese influencers and celebrities immediately stopped collaborating with the brand, while the clothing also disappeared from the major e-commerce platforms.
Given the great importance of China, both as a sales market and as a supplier, the Swedish clothing group is compelled to stick it out. "China is a very important market to us, and our long-term commitment to the country remains strong. Having been present there for more than thirty years, we have witnessed remarkable progress within the Chinese textile industry. Being at the forefront of innovation and technology, China will clearly continue to play an important role in further developing the entire industry," H&M Group stated.