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Brands See an Uptick in Online Sales During the Covid-19 Crisis

As lockdown measures across the globe remain in place key fashion players, including H&M, Zalando, Hugo Boss, Puma and Inditex have benefitted from an increase in consumers pivoting their spending online.
Online shopping | Source: Shutterstock
By
  • Reuters

LONDON, United Kingdom — Retailers selling fashion online are emerging as the winners of the coronavirus crisis as consumers are staying home even as stores start to reopen, results from major companies showed on Thursday.

Shares in Zalando, Europe's biggest online-only fashion retailer, jumped 11 percent to a new record high after it said it expects full-year sales growth of 10-20 percent.

RBC analyst Sherri Malek said the fact Zalando had added 39 percent more new customers in April was "evidence of the accelerated consumer shift from offline to online".

In contrast, H&M, the world's second-biggest fashion retailer, said local currency sales had tumbled 57 percent in the March 1-May 6 period, while online sales grew almost a third.

H&M started to gradually reopen stores from late last month, but 3,050 or 60 percent remain closed.

In Germany, its biggest market where the lockdown has been gradually lifted in recent weeks, sales were down 46 percent so far in the second quarter, and they fell a third in China.

"In those markets that have begun to open up, trade in the stores has initially been muted," it said on Thursday in a statement ahead of its annual general meeting later in the day.

More than half of Germans surveyed by consultants at McKinsey have not gone shopping for non-essentials even though stores are reopening, with most looking to minimise risks.

The survey conducted between April 30 and May 3 showed that 41 percent of Germans plan to shop less apart from groceries, with more than half of consumers worried about the state of the economy.

In Spain, Zara-owner Inditex started to reopen some of its smaller stores by appointment on Thursday as part of a gradual reopening in its home market where shops have been shuttered for more than seven weeks.

Luxury Slump 

Global sales of luxury goods are expected to slump by 50 percent to 60 percent in the second quarter even as some countries begin to ease lockdowns and despite signs of recovery in the Chinese market, consultancy Bain said on Thursday.

Online luxury has remained resilient though, Bain said, and the crisis will speed the shift to digital shopping, which is expected to reach 30 percent of sales by 2025 from 12 percent in 2019.

Sportswear firm Puma expects its second-quarter results will be worse than the first as so many of its stores are closed, but is optimistic its sales will bounce back as the crisis has led more people to exercise.

Chief Executive Bjorn Gulden said fewer people are going shopping in China than before the crisis, but those customers who come to stores are buying more.

Hugo Boss reported a similar trend in Germany, saying although shoppers were still scarce, those who do venture out are willing to spend more than usual at the fashion house best known for its smart men's suits.

Bain said that in China store traffic has nearly halved from a year ago, but people are more inclined to buy and the average spend has also increased.

Hugo Boss said online sales jumped 39 percent in the first quarter to account for 11 percent of total sales and accelerated again strongly in April. Puma saw e-commerce grew around 40 percent in the first quarter and by 77 percent in April. The Puma Chief Executive said that reinforced the company's decision before the crisis to invest more in online logistics, although e-commerce sales were slowing again in China as stores reopened.

Zalando, which sells fashion and beauty products in 15 European markets, said it has signed up 50 new brands to its marketplace in the last three weeks including Vaude, American Eagle Outfitters and the Lipsy London label of Britain's Next.

To help more bricks-and-mortar retailers sell online, Zalando said it would extend an offer to shops to digitise their assortment to Spain, Sweden and Poland in the third quarter.

By Emma Thomasson with additional reporting from Sonya Dowsett, Anna Ringstrom, Niklas Pollard, Sarah White and Silvia Aliosi; editor: Elaine Hardcastle

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