The Stockholm-based low-cost fashion brand Hennes & Mauritz AB has reported an expected loss in the first quarter. The company, the world’s second biggest fashion retailer that is known for the brand H&M, said that it swung to a net loss of 1.07 billion Swedish kronor ($122 million) in the December to February period compared with a profit of 1.93 billion kronor a year earlier.
Sales decreased to 40.1 billion kronor from 54.9 billion as the company said that the resurgence of the COVID-19 pandemic had hit the company badly, leading to the temporary closure of up to 1,800 stores, or some 36% of all of its stores worldwide, during the quarter.
Similar to some other Western brands, Hennes & Mauritz has recently faced a backlash in China over the company’s continued ethical decision not to use cotton sourced from the Xinjiang region and allegedly produced by forced labour including minority groups such as the Uyghurs.
As a result of online backlash from Chinese social media, it has seen its H&M brand erased from major e-commerce sites in China and its store locations have vanished from some digital maps in moves considered retaliatory.
The Chinese government has denied allegations of forced labour in Xinjiang, most recently last week.
H&M is the world’s second-largest fashion retailer by sales, after Inditex, the owner of Zara, and China is its fourth-biggest market.