H&M Set to Close Hundreds of Stores as COVID-19 Causes 16% Sales Drop

UTC by Tolu Ajiboye · 3 min read
H&M Set to Close Hundreds of Stores as COVID-19 Causes 16% Sales Drop
Photo: Marco Verch / Flickr

The H&M group plans to shut down hundreds of stores next year due to a decline in sales and an increase in online shoppers.

H&M – Hennes & Mauritz AB – (Stockholm: HM.B) is planning to close hundreds of its stores amid sales loss. The company revealed plans to shut down 5% of its stores in 2021.

On the 1st of October, Swedish multinational retail company H&M reported an unexpected loss in its Q3 profit. The group revealed that third-quarter sales fell 16% to 51 million kronor, which equals $5.7 million. As noted by the retail company, the loss is largely due to the persisting coronavirus pandemic.

H&M Plans to Close Down Stores Amid Sales Loss

Earlier this year, H&M forecasted that its net number of stores would decline in 2020. Now, over a thousand of its stores are temporarily closed. At the beginning of Q3, 900 of the company’s stores were temporarily closed as a result of the lockdown.

As the pandemic persists, H&M unveiled that 3% of its total number stores are still closed. The percentage of the currently closed stores equals 166 outlets out of more than 5000 stores. In addition, some of the company’s stores are still affected by limited opening hours.

The H&M group also recorded a profit of 1.8 billion kronor ($200 million), lower than the 3.9 billion kronor profit reported last year.

However, the company said sales are rebounding from the effect of the coronavirus pandemic. The CEO of H&M Helena Helmersson said:

“Through much-appreciated collections and rapid, decisive actions, we returned to profit already in the third quarter.”

Noting that the health crisis affected the various divisions of the company, Helmersson added:

“Although the challenges are far from over, we believe that the worst is behind us and we are all well placed to come out of the crisis stronger.”

In addition, JPM analysts noted:

“Overall, Q3 is a better quarter than expected and we think H&M continued to manage well what they could directly influence.”

H&M Online Shoppers Increase

Furthermore, H&M’s plan to close some of its stores is also fueled by the surge in online shoppers. Since the pandemic started, especially during the lockdown, many people have resorted to online shopping.

Founded in 1943, the H&M group has expanded over the years and now includes several brands. Apart from H&M, others are COS, Monki, Weekday, & Other Stories, H&M Home, ARKET, and Afound. H&M’s online shopping is available in 51 countries, while its stores spread across 74 countries. Globally, H&M is the second-largest clothing retailer behind Zara.

As H&M records loss in sales, its rival retail group Zara reported a rebound in May through July.

Over the past twelve months, H&M lost over 13%. Also, the company declined 12.54% in its year-to-date performance. However, as the CEO said, the company is recovering from losses.

Currently, H&M is up 7.72% to 199.75 kronor over its previous close of 154.75 kronor. The company has also jumped 18.37% over the past month and nearly 20% in the last one month. In addition, H&M gained 13.64% in the last five days.

Business News, Market News, News, Stocks, Wall Street
Related Articles