Fast-Fashion Giants Sped Up in Recent Weeks, Then Fresh Lockdowns Hit

PARIS — Fast-fashion giants H&M Group and Inditex touted an improvement in business in recent weeks, even as the renewal of coronavirus lockdowns weighed on their performances.

Zara owner Inditex reported a 10 percent decline in third-quarter sales with brisk online growth, and signaled a strong recovery in operations over the period running from August through October. “In a somewhat more normalized environment, store sales have recovered strongly,” the Spanish retailer said Tuesday.

H&M Group posted a 10 percent sales decline in local currencies over in fourth-quarter, running from Sept. 1 through Nov. 30, trumpeting a strong recovery for much of the period, before a second wave of lockdowns weighed on business.

Inditex sales came to 6.05 billion euros, a 10 percent decline at constant currencies, while net income was down 13 percent to 866 million euros for the August to October period. Its online business grew 76 percent over the quarter.

The fast-fashion giant reported that 5 percent of its stores were closed while 88 percent were affected by lockdown restrictions. The company is adjusting its network, focusing on bigger stores and that space growth for the year is on track.

The Spanish retailer, which also owns labels Massimo Dutti, Bershka and Stradivarius, turned the corner in the second quarter, bouncing back from a loss at the start of the year.

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Inditex has moved quickly on the digital front, building state-of-the-art tracking systems in stores and offering speedy delivery in urban areas. It is investing nearly 3 billion euros over the next two years to further improving its digital platforms and integrating store and online stock, while culling smaller boutiques to focus on high-tech flagships.

It recently enlarged its flagship in central Paris and had plans to open one of its largest stores in Asia in Beijing, touted as one of the most technologically advanced in the whole group.

H&M Group sales came to 52.54 billion Swedish kronor, or $6.24 billion, for the fourth quarter. A 3 percent sales decline in the first part of the quarter deepened to a 22 percent decline as a new wave of coronavirus measures swept across its markets. The company releases full-year results on Jan. 29.

“Industry conditions have remained challenging for H&M,” noted Richard Chamberlain of RBC, citing the negative impact of further lockdowns and social-distancing measures. The analyst flagged good momentum for the retailer before the second wave of coronavirus restrictions.

The Swedish fast-fashion retailer had outperformed expectations last quarter with stronger full-price sales, a key issue for a company that had been caught in discounting spirals in past years.

The retailer has undergone a broad overhaul, improving digital services and refocusing its offer. Signs of improvement were just emerging as the coronavirus crisis hit.

The group, which operates Cos, Monki and Weekday in addition to H&M, has reacted to the crisis by cutting costs and renegotiating leases for its sprawling network of stores.

Analysts have forecast a modest pace of recovery for the fast-fashion industry.

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