H&M reported an 88% fall in profit for the year through to November on Friday (January 29).
And the world's second-biggest fashion group warned sales will continue to be hit.
The Swedish retailer said its full-year pretax profit fell to $245 million, hurt by restrictions and lockdowns.
Profits in its final quarter fell less than expected though, helped by large cost cuts.
H&M had already reported a 10% fall in sales for the fourth quarter.
But the group's CEO Helena Helmersson said that "it is clear that when customers have the opportunity to shop – the collections are appreciated".
Sales in the first two months of its first quarter were down 23% as up to a third of H&M's around 5,000 stores were temporarily closed.
However, looking beyond the health crisis, analysts say they see some positives for H&M.
The company said due to uncertainty though, its board would come back later with a proposed date and level for resuming H&M's dividend.