H&M banks on customer loyalty to help turn around Covid losses
H&M group recorded a pre-tax loss of more than £100m in the first quarter of 2021, but has highlighted customer loyalty, sustainability and online as areas of growth.
H&M group has pointed towards the ‘rapid’ growth of its customer loyalty programme as a sign that its customer base is continuing to expand despite falling reporting a loss in its latest quarterly statement as Covid-19 restrictions kept stores closed.
In its financial report for the three months to the end of February, H&M said its customer loyalty programme, H&M Membership, now has over 120 million members in 26 markets – a 71% increase on the same period last year. The loyalty scheme is for the group’s titular brand only and does not include the remaining brands in the group’s portfolio, which includes ARKET, &OtherStories, Monki and H&M Home.
“Our customer base is growing and one example of this is the rapid increase in the number of members of H&M’s customer loyalty programme,” says CEO Helen Helmersson.
“While we are humbled by the uncertainty that still exists due to the pandemic, it is fantastic to see the great interest that customers are showing in our collections. With a well-positioned customer offering we are continuing our transformation at full speed in order to create long-term sustainable and profitable growth for the H&M group.”
H&M has made some significant additions to its programme. On top of its pre-existing features, which include earning reward points on purchases, discounts, and the option to ‘shop now, pay later’, H&M members can now earn points for making more conscious choices.
Loyal customers will now be rewarded for bringing in old clothes for H&M’s garment collecting, choosing climate-smart delivery options, bringing their own bag when shopping, and choosing products made from more sustainable materials.
The update to the scheme comes as part of continued efforts by H&M to deliver more sustainable fashion. In its 2021 Sustainability Report, also published today (31 March), the business outlined a number of sustainability goals, including one goal to achieve 30% recycled materials by 2025 and another to reduce packaging across the value chain by 25% by 2025, compared with 2018.
H&M group’s net sales decreased by 21% year on year over the first quarter of 2021, falling to a total of SEK 40.06m (£3.34m)
The group therefore posted a pre-tax loss of SEK 1.39m (£115m) over the quarter, compared with a SEK 2.5bn profit last year. H&M attributes the loss “entirely” to the drop in sales brought about by Covid-19 related restrictions, with around 1,800 stores closed and “substantially reduced” footfall to those that were open.
However, the group notes that reduced instore sales were “partly compensated for” by growth in online sales, which increased by 57% in the first quarter.