Global fashion retailers face a potentially harsh winter, but at least they aren’t wasting the crisis.

Shares in Swedish clothing chain

Hennes & Mauritz


HM.B 6.04%

rose 8% in morning trading Thursday after it reported good news about September sales. Revenue was 5% lower in the month compared with a year ago—a sharp recovery from the 16% year-over-year drop for the three months through August that the company announced a few weeks ago.

H&M also beat earnings expectations for the summer quarter. The business made a pretax profit of 2.4 billion Swedish krona, or roughly $260 million, while analysts had thought it would barely break even. The same thing happened at Zara-owner

Inditex,


ITX 2.31%

the world’s largest clothing retailer by market value, and fast-fashion chain Primark, that both reported better-than-expected summer profit.

Global clothing brands have done a good job of controlling what they could during the pandemic. Despite widespread store closures in the spring, H&M ended August with the same amount of stock that it held a year earlier. Inditex, which has an especially flexible supply chain, is carrying one-fifth less. Having stores in Asia, where the pandemic first appeared, undoubtedly gave them more insight into what was coming next than regional retailers in Europe and the U.S. “They canceled orders early on and then were cautious about new ordering. So there has been less discounting and stock levels are better than expected,” said Aneesha Sherman of brokerage Bernstein.

The crisis has handed retailers leverage with landlords too. H&M negotiated rent cuts of up to 30% in certain markets and plans to close 5% of its stores in 2021 as it reverses decades of expansion. Inditex will shrink its physical network by a more dramatic 12% over the next two years as more sales move online.

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