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Fashion Retailer H&M Posts Surprise Dec-Feb Profit

The H&M clothing store is seen in Times Square in Manhattan, New York, US, November 15, 2019. REUTERS/Mike Segar
The H&M clothing store is seen in Times Square in Manhattan, New York, US, November 15, 2019. REUTERS/Mike Segar
    Asharq A-Awsat
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Fashion Retailer H&M Posts Surprise Dec-Feb Profit

The H&M clothing store is seen in Times Square in Manhattan, New York, US, November 15, 2019. REUTERS/Mike Segar
The H&M clothing store is seen in Times Square in Manhattan, New York, US, November 15, 2019. REUTERS/Mike Segar

H&M, the world's second-biggest fashion retailer, reported on Thursday a surprise operating profit for the December-February period, despite weak demand as consumers curtailed spending amid soaring inflation.

Operating profit in the Swedish group's fiscal first quarter was 725 million Swedish crowns ($69.73 million) against a profit of 458 million a year earlier and a mean forecast of 1.10 billion loss in a Refinitiv poll of analysts.

The company said consolidating the earnings of its Sellpy second-hand platform had boosted earnings by about 1 billion crowns.

While H&M showed signs of bringing its costs under control, it still struggled to compete with major rival Inditex, owner of Zara and other brands, as well as rapidly expanding fast fashion online retailers such as SHEIN and Temu.

"The external factors that influence purchasing costs continue to improve, work on the cost and efficiency program is proceeding at full speed, and many of the changes that we have made in recent years are starting to have an effect," Chief Executive Helena Helmersson said in a statement.

H&M's first quarter revenue, published separately on March 14, was worse than feared as the small increase in sales missed most estimates, analysts said at the time.

As Inditex lured customers back to in-person shopping after the pandemic, H&M's more cost-conscious base has been reluctant as inflation eats into purchasing power, while SHEIN and Temu won success online with cut-price items such as $10 dresses.

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As Fast Fashion's Waste Pollutes Africa's Environment, Designers in Ghana are Finding a Solution

Attendees at a thrift and an upcycle show pose for a photograph in Accra, Ghana, Sunday, Oct. 27, 2024. (AP Photo/Misper Apawu)
Attendees at a thrift and an upcycle show pose for a photograph in Accra, Ghana, Sunday, Oct. 27, 2024. (AP Photo/Misper Apawu)
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As Fast Fashion's Waste Pollutes Africa's Environment, Designers in Ghana are Finding a Solution

Attendees at a thrift and an upcycle show pose for a photograph in Accra, Ghana, Sunday, Oct. 27, 2024. (AP Photo/Misper Apawu)
Attendees at a thrift and an upcycle show pose for a photograph in Accra, Ghana, Sunday, Oct. 27, 2024. (AP Photo/Misper Apawu)

In a sprawling secondhand clothing market in Ghana’s capital, early morning shoppers jostle as they search through piles of garments, eager to pluck a bargain or a designer find from the stalls selling used and low-quality apparel imported from the West.
At the other end of the street, an upcycled fashion and thrifting festival unfolds with glamour and glitz, The Associated Press reported. Models parade along a makeshift runway in outfits that designers created out of discarded materials from the Kantamanto market, ranging from floral blouses and denim jeans to leather bags, caps and socks.
The festival is called Obroni Wawu October, using a phrase that in the local Akan language means “dead white man’s clothes.” Organizers see the event as a small way to disrupt a destructive cycle that has made Western overconsumption into an environmental problem in Africa, where some of the worn-out clothes end up in waterways and garbage dumps.
“Instead of allowing (textile waste) to choke our gutters or beaches or landfills, I decided to use it to create something ... for us to use again,” said Richard Asante Palmer, one of the designers at the annual festival organized by the Or Foundation, a nonprofit that works at the intersection of environmental justice and fashion development.
Ghana is one of Africa's leading importers of used clothing. It also ships some of what it gets from the United Kingdom, Canada, China and elsewhere to other West African nations, the United States and the UK, according to the Ghana Used Clothing Dealers Association.
Some of the imported clothes arrive in such poor shape, however, that vendors dispose of them to make room for the next shipments. On average, 40% of the millions of garments exported weekly to Ghana end up as waste, according to Neesha-Ann Longdon, the business manager for the Or Foundation’s executive director.
The clothing dealers association, in a report published earlier this year on the socioeconomic and environmental impact of the nation’s secondhand clothing trade, cited a much lower estimate, saying only 5% of the items that reach Ghana in bulk are thrown out because they cannot be sold or reused.
In many African countries, citizens typically buy preowned clothes — as well as used cars, phones and other necessities — because they cost less than new ones. Secondhand shopping also gives them a chance to score designer goods that most people in the region can only dream of.
But neither Ghana's fast-growing population of 34 million people nor its overtaxed infrastructure is equipped to absorb the amount of cast-off attire entering the country. Mounds of textile waste litter beaches across the capital, Accra, and the lagoon which serves as the main outlet through which the city’s major drainage channels empty into the Gulf of Guinea.
“Fast fashion has taken over as the dominant mode of production, which is characterized here as higher volumes of lower-quality goods,” Longdon said.
Jonathan Abbey, a fisherman in the area, said his nets often capture textile waste from the sea. Unsold used clothes “aren’t even burned but are thrown into the Korle Lagoon, which then goes into the sea,” Abbey said.
The ease of online shopping has sped up this waste cycle, according to Andrew Brooks, a King’s College London researcher and the author of “Clothing Poverty: The Hidden World of Fast Fashion and Second-hand Clothes.”
In countries like the UK, unwanted purchases often end up as charity donations, but clothes are sometimes stolen from street donation bins and exported to places where the consumer demand is perceived to be higher, Brooks said. Authorities rarely investigate such theft because the clothes are "seen as low-value items,” he said.
Donors, meanwhile, think their castoffs are “going to be recycled rather than reused, or given away rather than sold, or sold in the UK rather than exported overseas,” Brooks said.
The volume of secondhand clothing sent to Africa has led to complaints of the continent being used as a dumping ground. In 2018, Rwanda raised tariffs on such imports in defiance of US pressure, citing concerns the West's refuse undermined efforts to strengthen the domestic textile industry. Last year, Ugandan President Yoweri Museveni said he would ban imports of clothing “from dead people.”
Trade restrictions might not go far in either reducing textile pollution or encouraging clothing production in Africa, where profits are low and incentives for designers are few, experts say.
In the absence of adequate measures to stop the pollution, organizations like the Or Foundation are trying to make a difference by rallying young people and fashion creators to find a good use for scrapped materials.
Ghana's beaches had hardly any discarded clothes on them before the country's waste management problems worsened in recent years, foundation co-founder Allison Bartella said.
“Fast forward to today, 2024, there are mountains of textile waste on the beaches,” she said.