STOCKHOLM: Swedish clothing retail giant Hennes and Mauritz (H&M) reported a better than expected third-quarter profit on Thursday, but said it was closing stores as Covid-19 was pushing more shoppers online.
The company said it was planning on shutting 350 out of its around 5,000 stores worldwide in 2021, while only opening 100 new ones.
"The rapid changes in customer behaviour have been accelerated by Covid-19. The H&M group is therefore now stepping up the pace of its transformation," the company said in its quarterly report.
Net profit for the period from June to August came in at 1.8 billion Swedish kronor ($201 million, 172 million euros), compared to 3.9 billion kronor for the same period a year earlier.
Revenue fell 18.7 per cent to 51 billion kronor.
At the same time online sales, which currently only represent a quarter of total sales, grew by 28 per cent during the third quarter in local currencies.
Pre-tax profit came in at 2.4 billion kronor, an improvement over the 2.0 billion kronor reported in preliminary results published in mid-September.
"Our recovery is going better than expected... With more full-price sales than expected and strict cost control, we returned to profit already in the third quarter," CEO Helena Helmersson said in a statement.
In its second-quarter H&M posted a net loss of some five billion kronor, compared to a net profit of 4.6 billion a year earlier while revenue halved to 28.7 billion kronor.
At midday on the Stockholm stock exchange, shares in H&M were up seven per cent.
Fashion retailers, especially fast-fashion brands like H&M, have been hit hard by the ongoing pandemic.
In mid-April, the Scandinavian company temporarily closed around 80 per cent of its stores worldwide.
Currently, three per cent, or 166 shops, remain shut.