Clothing retailers H&M and ASOS have reported positive outlooks, leading to a surge in share prices for both companies.
H&M saw a 6.9% increase in shares as second-quarter revenue exceeded pre-pandemic levels and June sales started strongly. Meanwhile, ASOS shares rose by as much as 16% after the UK e-commerce company returned to profitability, with a projected £60m ($76m) of adjusted operating income expected in the second half of the year as the company makes cuts to inventory and focuses on boosting its weaker brands and markets.
The future of ASOS has been speculated in recent weeks, with its value falling by around 90% over three years. However, CEO Jose Antonio Ramos Calamonte has been working to overhaul the company, and major shareholder Mike Ashley recently increased his stake in the company.
H&M reported flat sales for the three months to May due to cold weather, but overall revenue reached 57.62bn kronor ($5.4bn) and the company stated that business has now fully recovered from the pandemic. Despite this, H&M struggles to match the sales growth of Inditex, the owner of competitor Zara, which saw a 15% rise in revenue for the three months to April.
Clothing retailers have been facing increased competition from online companies such as Shein, which offers cut-price garments to gain customers worldwide. Meanwhile, the pandemic has also resulted in a shift in consumer spending habits, with more focus on essential purchases such as food and household bills and less on discretionary spending such as clothing.
Overall, these two retailers, H&M and ASOS, have reported optimistic outlooks and are focusing on strategies to strengthen their position in the market.