H&M is ramping up the pace of store closings in 2020 as it shifts focus to its online shopping business to reflect changing consumer shopping habits in the wake of the coronavirus pandemic.
The fast-fashion retailer announced in its six-month report that it intends to increase the pace of closures and reduce the number of openings in 2020. Around 170 outposts are expected to shut down — 40 more than it had originally planned — and about 130 openings are anticipated.
Focus to Online Shopping:
“It is clear that the rapid changes in customer behaviour caused by the pandemic will further speed up the digitalisation of fashion retail,” H&M Group CEO Helena Helmersson said in the earnings release on Friday.
“During the pandemic, it became clear how important it is that the digital and physical channels interact to meet customers’ needs,” Helmersson added.
“To meet this, we are continuing to adapt the organisation and improve our ways of working, which will make us more flexible, fast and efficient. We are accelerating our digital development, optimising the store portfolio and further integrating the channels,” she said.
H&M swung to a steep loss in the second quarter: For the three months ended May 31, the Swedish company reported a pretax loss of 6.5 billion crowns (or $696 million at current exchange) and a 50% decline in sales to 28.66 billion crowns (or $3.07 billion). In mid-April, roughly 80% of its brick-and-mortar fleet was temporarily shut down as a result of the COVID-19 health crisis.
In early April, the company warned that it was expecting to post a quarterly loss for the first time in decades in the second three-month period of its fiscal year. Although consumers were still able to shop online, the group at the time said it had seen “subdued demand” in its open markets.
To preserve cash, H&M sought to reduce costs in the areas of buying, investments, rents and staffing — including furloughing a portion of its workforce in the United States. It also ramped up its focus on digital sales channels; the retailer’s online sales increased by 32% in local currencies.
So far for the month of June, H&M reported a 25% decrease in sales, compared with the same period last year. Currently, about 350 stores — representing 7% of its total global locations — remain closed, with a “large number” of units still under some local restrictions and operating under limited hours.
This comes just a few weeks after other major retailers including Victoria’s Secret and Zara were forced to permanently close hundreds of stores globally.