This article was originally published on Retail Gazette.
H&M has confirmed plans to shut around 250 of its stores globally next year after the Covid-19 pandemic moved more shoppers online.
The Swedish fashion giant said about a one quarter of its 5000-plus stores worldwide will have the chance to renegotiate or end leases next year, allowing the firm to shut down some stores in the process.
H&M also said it was accelerating it transformation work by investing in digital and optimising its store portfolio to react to the rapid changes in consumer behaviour that have resulted from the pandemic.
Meanwhile, H&M said it has seen sales continue to recover in September, although sales remained five per cent lower than the same month last year.
Currently 166 stores, representing three per cent of its total global estate, are still closed due to local lockdowns – although a large number of other H&M stores still have local restrictions and limited opening hours.
It comes as the retailer reported that its pre-tax profits fell to 2.37 billion Swedish krona (£210 million) for the nine months to August 31, topping analyst expectations.
H&M said sales during the nine-month period were “significantly negatively affected by the Covid-19 situation, particularly in the second quarter when stores were temporarily closed in most markets”.
Net sales for the period fell to 134.48 billion Swedish krona (£11.51 billion) compared to 171 billion Swedish krona (14.64 billion) a year ago, after 80 per cent of H&M’s stores worldwide were affected by lockdown restrictions at the height of the pandemic during the second quarter.
“As a result of much-appreciated collections together with rapid and decisive actions, our recovery is going better than expected,” H&M chief executive Helena Helmersson said.
“We have strong, profitable online growth, and more and more stores have been able to open again.
“With more full-price sales than expected and strict cost control, we returned to profit already in the third quarter.
“Although the challenges are far from over, our assessment is that the worst is behind us and we are well placed to come out of the crisis stronger.
“More and more customers started shopping online during the pandemic, and they are making it clear that they value a convenient and inspiring experience in which stores and online interact, and strengthen each other.
“The substantial investments made in recent years have been very important for our recovery, and we are now accelerating our transformation work further to meet customers’ expectations.”
She added: “We are increasing digital investments, accelerating store consolidation and making the channels further integrated.
“To ensure that our offerings are relevant to customers and improve availability in all channels, speed and flexibility will be even more important in the future, particularly in the supply chain.
“Covid-19 has also highlighted the importance of sustainability. Demand for good value, sustainable products is expected to grow in the wake of the pandemic and our customer offering is well positioned for this.
“Through our work to become circular and climate positive we are increasing the share of sustainable and renewable materials and we are developing new revenue streams.”
H&M’s trading update encapsulated its full retail portfolio, which includes Cos, Monki, Weekday, & Other Stories, Cheap Monday, Arket, H&M Home and H&M itself.
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