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As H&M’s Sales Rebound, Is Fast Fashion Really at Risk of Pandemic-Fueled Decline?

With consumers and investors more attentive than ever to the fashion industry’s environmental impact, there has been speculation that fast-fashion companies — whose business models rely on churning out massive quantities of inexpensive products season after season — may soon be out of favor.

These shifting attitudes don’t seem to be hurting H&M’s pockets just yet, however. The Swedish fast-fashion giant reported first-half results on Thursday that beat expectations, with pretax profit coming in at 3.59 billion Swedish crowns ($419 million) up from a loss of 6.48 billion last year. Analysts had forecast a profit of 3.42 billion.

The group’s net sales also jumped from last year, up 12% in local currencies during the first half of 2021 to 86.6 billion ($10.1 billion), though they still remained below 2019 levels of 108.5 billion. This was largely due to store closures, however: At one point during the first half of this year, about 1,800 of the group’s stores were temporarily closed, accounting for about 36% of its total footprint.

“With our much-appreciated collections, our ongoing transformation and the fact that markets are gradually being opened up, our recovery is strong,” said H&M Group CEO Helena Helmersson in a statement. “Online sales have continued to develop very well even as the stores have opened, which shows that customers appreciate the collections and being able to shop via their preferred channel.”

H&M has put its sustainability investments front-and-center in its marketing efforts, touting its use of renewable materials and tapping stars like Billie Eilish and Maisie Williams for eco-conscious collaborations and ambassadorship. It is also rapidly expanding Sellpy, the secondhand retail business in which it owns a majority stake, launching stores in an additional 20 markets during the first half of 2021, bringing its total footprint to 24 markets around the globe.

These initiatives may help H&M stay in customers’ good graces, though, as UBS analysts warned in a note to clients this spring, reducing output will ultimately be “absolutely crucial” for retailers that wish to meet any legitimate sustainability goals.

“Whether the garment is conventionally produced with a significant environmental footprint — the cotton used in a T-shirt is organic, the polyester in a fleece is recycled or the garment or shoe is vegan, which, incidentally, often means plastic — becomes largely insignificant when set against the sheer quantity of items produced and discarded,” wrote analyst Victoria Kalb and her team in the note.

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