Shares in Zara and H&M sunk by new Covid wave despite both fashion chains posting bumper sales
Two of the world’s biggest fashion retailers were battered by fears over the Omicron strain yesterday despite posting bumper sales.
Zara owner Inditex and rival H&M reported sales returning to or above pre-pandemic levels, but had billions wiped off their market caps.
Inditex, listed in Madrid, fell 5.2 per cent, to 27.43 euros, wiping 4.7billion euros (£4billion) off its value. Meanwhile H&M’s shares fell 2.8 per cent knocking more than £600million off its market cap.
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Spain’s Inditex saw sales and profit in the nine months to October 31 hit ‘historic highs’.
Meanwhile, the smaller Swedish H&M said that sales returned to pre-Covid levels in the three months to November 30. But the results missed analysts’ expectations.
Omicron is driving a resurgence of Covid cases which has left investors cautious ahead of the key Christmas period.
RBC analyst Richard Chamberlain said: ‘The main short-term risk we see for Inditex is further restrictions on stores and travel flows due to Omicron, especially in southern Europe.’
He said Inditex makes around 15 per cent of sales in major city centres that are heavily dependent on tourism.
H&M said that it is still being hit by the pandemic with 115 shops, mainly in Austria and Slovakia, still closed at the end of November.