What is your analysis of H & M's latest quarterly report?
- Now we are starting to see the effects of the shutdown of large sections of society that the corona virus entails and now it is also starting in the major stock exchange companies' reports. Unfortunately, it is not surprising that sales have dropped so much when 3,778 of 5,065 of H&M's businesses are now closed, but it is brutal to see it so black and white. We know that trade is bleeding and that many companies will be forced to terminate and lay off staff.
What is weighing the result?
- According to the report, H&M saw its sales in China in February basically stop. Although China is starting to open up, this is something that will spread to the rest of the world where large markets such as Germany and the US are also closed. Therefore, it is also not surprising that H&M forecasts a loss for the second quarter. At the same time, H&M sees its online sales increase dramatically, but not to the same extent as sales in physical stores decrease. The digitization and shift from physical stores to online stores will most likely go faster. Right now, unfortunately, there are few signs of a rapid recovery of the economy and it will also affect everyone, including H&M.
H&M has decided to cut dividends and is looking at remuneration to managers, why then?
- H&M will need to take advantage of the support packages available with both short-term permits and rent reduction. Then you have to keep clean in front of your own door. We have a certain debate about stock dividends in Sweden, but when the extent of the crisis we are in globally becomes clearer, I think many companies will understand the importance, if nothing else for their brand, of showing that they understand and share the difficult situation that many people are in right now.
- I am convinced that we will see a similar debate in Sweden regarding bonuses and remuneration to managers. In the UK, for example, one of Schroders' biggest investors has said that they are looking for companies that have been tough but at the same time demand that senior executives in the large companies "share the pain" and share the tough financial situation with their employees and subcontractors.