H&M profit tops forecast as recovery gathers strengthH&M profit tops forecast as recovery gathers strength
FILE PHOTO: The H&M clothing store is seen in Times Square in Manhattan in New York

STOCKHOLM (Reuters) – H&M, the world’s second-biggest fashion retailer, said on Thursday sales continued to recover in September as it reported a fiscal third-quarter profit that was slightly higher than a preliminary reading and analyst expectations.

Pretax profit at the Swedish group fell to 2.37 billion crowns ($265.6 million) from a year-earlier 5.01 billion. Analysts polled by Refinitiv had on average forecast a 2.03 billion crown profit.

H&M had flagged in September that profit would land at around 2 billion crowns, much higher than feared as it recovered more quickly than expected from a pandemic-induced slump.

“Through much-appreciated collections and rapid, decisive actions, we returned to profit,” Chief Executive Helena Helmersson said. “Although the challenges are far from over, we believe that the worst is behind us and we are well placed to come out of the crisis stronger.”

In the March-May quarter, the pandemic pushed H&M into a steep loss, its first decades, as sales halved.

H&M said on Thursday its September sales were down 5% year-on-year in local currencies after they fell 19% in the three months through August.

Of more than 5,000 stores worldwide, 3% remain temporarily shut against around 80% at the height of lockdowns, it said.

Rivals have equally seen recovery build, with market leader Inditex, the owner of Zara, reporting a return to profit in its May-July quarter.

($1 = 8.9232 Swedish crowns)

(Reporting by Anna Ringstrom; editing by Niklas Pollard)