H&M Group is trimming its brick-and-mortar fleet.
The fast-fashion retailer announced plans to permanently shut down 250 stores next year after eliminating 50 locations in 2020. The reductions will affect 5% of its total global units.
According to the company, about a quarter of its outposts have a contractual right to renegotiate or exit their leases every year. As more consumers shift their dollars online amid the COVID-19 health crisis, H&M revealed that it would accelerate the consolidation of its stores, ramp up investments in digital and double down on its omnichannel business.
“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,” CEO Helena Helmersson said in a statement. “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.”
The announcement came in tandem with the release of the Sweden-based chain’s third-quarter financial report: It posted pretax profits that dropped to 2.37 billion crowns (or $265 million at current exchange) from the prior year’s 5.01 billion crowns. For the months of June through August, revenues fell 19% to 50.9 billion crowns ($5.7 billion).
At the beginning of the three-month period, roughly 900 of H&M’s more than 5,000 stores were temporarily shut down in order to prevent the spread of the outbreak. By Aug. 31, just over 200 locations were closed.
“Through much-appreciated collections and rapid, decisive actions, we returned to profit already in the third quarter,” Helmersson added. “Although the challenges are far from over, we believe that the worst is behind us, and we are well placed to come out of the crisis stronger.”
So far in September, sales have declined by 5% in local currencies, as 166 outposts — representing 3% of all physical units — remain shuttered. A “large number” of stores, it added, are still adhering to local restrictions and operating at limited hours.
Comparatively, H&M swung to a steep loss in the second quarter: For the three months ended May 31, the retailer reported a pretax loss of 6.5 billion crowns (or $696 million at the time) and a 50% decline in sales to 28.66 billion crowns ($3.07 billion).