Present in 74 markets, H&M’s global operation makes the challenge of dealing with COVID-19 all the more harder, ensuring the pandemic is a true baptism of fire for new CEO Helena Helmersson.

Group Q1 sales growth of almost 8% is impressive against a tough comparative, especially as its performance was dragged down by China – its second largest market in terms of store estate. Q1 sales in China fell by 24% in local currency, as demand was obliterated in February, declining by 84% with almost two thirds of stores being closed at peak impact. Without China and other heavily-impacted countries including Hong Kong, Japan, Macau, Singapore and Taiwan, H&M’s group sales in local currencies rose 7% in Q1 (versus +5% overall). Despite the effects of COVID-19, Q1 operating margin rose 2.9ppts to 4.9%, as H&M reaped the rewards of its extensive transformation plan – which we expect to help protect the retailer in the long run and ensure it can better cater to a post-coronavirus consumer.

A recovery, albeit slow, as stores reopen in China provides hope, however the expansion of COVID-19 throughout other regions has been catastrophic with sales in March falling by 46% in local currency, versus 7% growth last year, owing to large-scale store closures across key markets. Online provided some respite with sales lifting 17% in local currency in the first month of Q2, with 47 out of 51 online sites still operating. Despite plans to cut operating costs by 20-25%, H&M has confirmed Q2 will be loss-making.

Protecting the business is a priority but just as it continues to lead the way on sustainability H&M has the opportunity to set itself apart from other fast-fashion retailers by setting the standard when it comes to treating stakeholders ethically amid the crisis. Promising is the news that while H&M has halted new orders, it has committed to accepting goods and paying suppliers in full for orders already met or in production – in contrast to Primark. Producing PPE equipment and making donations is commendable, but all eyes are on how H&M treats its thousands of workers, with reduced working hours and temporary lay-offs already enacted and redundancies remaining on the table.”