Fast fashion retailer H&M said it plans to close 250 stores worldwide next year after noting more and more of its customers rapidly shifting to online shopping during the coronavirus crisis.
Company CEO Helena Helmersson said the group had strong, profitable online growth during the August quarter, adding that overall sales continued to recover. However, year-on-year group-wide sales declined by 5 per cent in September.
“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,” Helmersson said.
H&M group’s net sales amounted to US$5.69 billion in the third quarter. In local currencies, net sales decreased by 16 per cent.
“Sales were affected by the Covid-19 situation,” the company stated. “At the beginning of the quarter approximately 900 of the group’s more than 5000 stores were temporarily closed. At the end of the quarter, over 200 stores were still temporarily closed.
Gross profit amounted to SEK 24,851 million ($2.78 billion) which corresponds to a gross margin of 48.9 per cent (down from 50.8 per cent last year).
Helmersson said the group is now stepping up the pace of its transformation work further like investing more on digital, optimising its store portfolio and increasingly integrating channels.
She said the plans to increase digital investment is to cope with the growing online demand of its customers.
“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,” Helmersson said.
“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.”
In addition, Helmersson said they will also be strengthening their position on sustainability.
“For 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,” she said.
“Covid-19 has 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.”