H&M, the world's second-biggest fashion retailer, swung into a steep loss in its March-May quarter and said its recovery outlook was uncertain.
However it said that trade had resumed faster than feared as pandemic lockdowns ease and stores reopen.
The biggest player Inditex, the owner of Zara, made its first loss in February-April. H&M's loss was the first in decades and possibly the first ever, a spokesman said.
The Swedish group reported a pretax loss of 6.5 billion crowns ($695 million), slightly below market expectations, compared to a year-ago 5.9 billion profit.
So far this year, the company's shares have dropped by 25%.
H&M, which had warned in April of the loss, gave no third-quarter earnings guidance.
"It's incredibly uncertain how economies open up," CEO Helena Helmersson told Reuters.
"With that, it's tremendously difficult to say how results will be. What's encouraging now is that the sales recovery is picking up in June," she added.
Helmersson said it was particularly hard to predict developments in the US, H&M's biggest market after Germany.
June sales fell a better-than-expected 25%, against a 50% second-quarter dive. H&M, however, warned of more price cuts in the third quarter to shift unsold spring and summer wear, after markdowns squeezed second-quarter margins.
Helmersson said some, less seasonal surplus garments could probably be sold during autumn. On orders to suppliers for autumn ranges, she said flexibility was essential.
"We will need to be careful not to buy too much a long time in advance. We need to wait as long as we can with purchases - to take the decisions as near the sales moment as possible," she said.
H&M, which has been battling a years-long rise in inventories, slightly reduced stocks in the second quarter.
It should also make savings with a decision to open fewer new stores this year than previously planned, and permanently close more.
Of more than 5,000 stores worldwide, 7% remained temporarily shut against around 80% at the height of lockdowns.
