Fast fashion brand H&M saw a slight increase in sales as it faces increased competition in the crowded sector.
The Swedish company on Wednesday (March 15) issued a report on its first-quarter sales that showed them climbing by 3% in local currencies. H&M is due to release its full quarterly earnings March 30.
The investment bank Jefferies — in a report quoted by Reuters — said H&M’s local currency sales were far lighter than estimates and suggested sales actually dropped 3% last month.
Jefferies said the results were “worse than feared” and that it anticipates H&M will report a loss in earnings at the end of the month.
H&M in January reported a 68% decline in fourth-quarter profits, with management attributing the drop to the company’s decision to wind down its business in Russia, as well as increased raw material and freight costs.
As PYMNTS noted at the time, an unsaid factor was the rise of Shein, a privately held fast-fashion eCommerce retailer that has become increasingly popular with younger consumers.
The company also faces competition from Zara owner Inditex, which reported its earnings for 2022 on Wednesday that showed sales increasing 18% since 2021.
Earlier this week, H&M announced it was working with reCommerce platform thredUP to launch the H&M Pre-Loved resale shop powered by thredUP’s Resale-as-a-Service model.
“We need to take responsibility for the impact fashion has on climate and the environment,” H&M North America Head of Sustainability Abigail Kammerzell said in a press release. “Circular business models can help us reduce and limit this negative impact, while continuing to deliver fashion and style for our customers.”
The company’s sustainability-focused program follows last year’s rollout of Inditex’s Zara Pre-Owned service, which lets customers extend the life of clothing by reselling it, donating it or having it repaired.
And both companies have of late both charging for online returns. PYMNTS wrote earlier this month that while charging for returns may make sense economically, “it is worth remembering that consumers still expect a frictionless experience, from pre-purchase to post-purchase.”
Research by PYMNTS shows that 96% of consumers review return policies before purchasing, while 54% said they were unlikely to purchase from a retailer that did not provide free returns. And shoppers who use easy return options are 52% more satisfied than those who do not.
Luckily for consumers, the vast majority of retailers seem to realize this as they see offering seamless returns as a way to increase loyalty.
“The lesson here is that instead of fearing costs and abuse of return policies, retailers must see easy returns as an opportunity for driving customer loyalty, increasing repeat business and upping overall sales,” PYMNTS wrote.
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