Thursday 1 July 2021 3:59 pm

H&M to cut 250 stores this year as customers head online

H&M plans to shut 250 stores globally this year as part of its strategy to recover from the Covid-19 pandemic, which saw many of its shops shut for months at a time.

The fashion retailer said the closure of the shops was in response to more customers shopping online, but declined to say how many stores would close in the UK, according to reports.

Hennes & Mauritz, the Swedish company behind H&M, which includes brands Monki and Cos, will close 350 stores this year, but will open 100 new sites, resulting in a decrease of 250 stores.

H&M today reported it had swung back to profit in its second quarter but said sales growth had slowed after mid June, highlighting a patchy recovery from the pandemic as restrictions ease and stores reopen.

The world’s second-largest fashion retailer reported a stronger than expected profit for the three months through May.

Sales for June 1-28 were up a quarter year-on-year but 4 per cent lower than in pre-pandemic 2019.

Chief Executive Helena Helmersson attributed the easing in the second half of the month to a combination of factors, including tough year-ago and 2019 comparisons, cold weather last week in some European markets, and how coronavirus restrictions were being eased.

“We see signals of a strong recovery also in June, and that customers appreciate our collections,” she told Reuters.

Analysts said the figures implied sales were down 9 per cent on 2019 in the latter two weeks of June, and noted that rival Primark has also said trading was currently very volatile from week to week.

“Recent weeks of trading highlight a mixed demand rebuild,” said Jefferies analyst James Grzinic. H&M’s shares were down 2.4 per cent by late morning.

Quarterly pretax profit was 3.59 billion crowns ($419 million) against a year-earlier loss of 6.48 billion.

“As more and more people are vaccinated and restrictions are eased, the world is gradually opening up and customers can once again visit our stores,” Helmersson said. “Online sales have continued to develop very well even as the stores have opened.”

H&M said 95 of its 5,000 stores globally remained temporarily closed, against 1,300 at the start of March.

China sales

In China, sales were down 23 per cent in local currencies when H&M was wiped off Tmall and domestic phonemakers’ app stores in March after the retailer expressed concerns about the alleged Xinjiang human rights abuses.

“With regards to China the situation remains complex. Beyond that we refer to what we have said before,” Helmersson said, as H&M quantified for the first time the impact of the China boycott, which started on social media.

China accounted for around 5 per cent of group sales last year and is one of H&M’s two top suppliers.

H&M in late March said it was dedicated to regaining the trust of customers and partners China and that its commitment to the country remained strong.