In the period from March 1-28, Hennes & Mauritz (H&M)’s net sales increased by 55 percent in local currencies, recovering from a 21 percent decline in the first quarter that ended Feb. 28.

On a reported basis, the Swedish fashion and accessories retailer H&M booked first-quarter net sales of 40,060 million Swedish krona (€3,900m-$4,596m), down from SEK 54.948 million (€5,352m-$6,304m) a year earlier, as a second wave of the Covid-19 pandemic resulted in extensive restrictions. At the peak, around 1,800 stores, or 36 percent of the total fleet, were temporarily closed. Online sales continued to develop very well, it noted.

In the quarter, the gross margin narrowed to 47.6 percent from 51.0 percent and the group posted a net loss of SEK 1,070 million (€104m-$123m) compared with a profit of SEK 1,928 million (€188m-$221m) a year earlier.

H&M said that in the first quarter, the program to streamline invoice management and payment processes has freed up just over SEK 3 billion (€0.29bn-$0.34bn ) of the around SEK 10 billion (€0.97bn-$1.15bn) in improvements that are expected to be obtained in 2021.

H&M also engaged into a damage-limitation exercise in the wake of a backlash in China following the re-emergence on social media of a statement released in 2020 in which it expressed concern about forced labor in the Chinese region of Xinjiang and pointed out that it does not buy products from the region.

In last year’s statement, H&M said that it was ”deeply concerned by reports from civil society organisations and media that include accusations of forced labor and discrimination of ethnoreligious minorities in Xinjiang Uyghur Autonomous Region (XUAR). We strictly prohibit any type of forced labor in our supply chain, regardless of the country or region.”

In effort to placate Chinese officials and consumers, H&M indicated on March 31, 2021,  that “China is a very important market to us and our long-term commitment to the country remains strong. Having been present there for more than thirty years, we have witnessed remarkable progress within the Chinese textile industry. Being at the forefront of innovation and technology, China will clearly continue to play an important role in further developing the entire industry.”

It added that it wants to be a “responsible buyer, in China and elsewhere” and that building forward-looking strategies and actively working on next steps with regards to material sourcing. Together with all relevant stakeholders, we want to collaborate to be part of the solution and jointly build a more sustainable fashion industry.” The statement does not mention the Xinjiang region.

During a conference call, H&M disclosed that 20 of its Chinese stores were closed at the end of March, without indicating whether it was a consequence to retaliation in the country.

The group also released its Sustainability Performance Report for 2020 that highlighted that 64.5 percent of its materials are from recycled or more sustainable sources and that whole cotton used is organic, recycled or sourced in a more sustainable way.

H&M expects to use 30 percent of recycled material by 2025 thanks to breakthroughs in the recycling of post-consumer fabric without quality loss.

It added that 32 percent of the tier 1 supplier factories it works with have trade union representation and 18 percent have collective bargaining agreements in place.