H&M Profits Jump, But China Boycott and Rising Costs Slow Path to Recovery

After a year and a half of intermittent store closures, supply chain disruptions and pandemic-related upheaval, H&M Group’s business is mostly back on track. On Thursday, the fast-fashion giant reported earnings for the quarter ended Aug. 31, with profits up 19% to 29.6 million Swedish kronor (about $3.4 million) and net sales increasing 9% to SEK 55.59 billion ($6.31 billion). These promising results were weakened, though, by product delays, rising production costs and the company’s ongoing struggles in China, where a labor-rights boycott has severely dented sales. Sales in the third quarter were back at pre-pandemic levels in North and South America, Europe and Africa, H&M said, but down 17% year-over-year in Asia and Oceania — a striking plummet given the widespread store closures during the same period in 2020. Currently, 50 of the group’s stores are temporarily shut due to lockdowns and other disruptions, compared with 1,800 earlier this year. China, once a key growth market for the group, fell off the list of its 10 largest markets, indicating that quarterly sales had dropped below SEK 1.6 million ($182.7 million) from SEK 3.1 million ($354.1 million) for the same period in 2019. The boycott came after H&M announced its decision to stop sourcing

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