H&M closes three stores in Australia as pandemic takes toll...
Fast fashion retailer H&M will close three stores in Australia this year but has denied reports it plans to shut about 15 per cent of its network after a drop in sales during the pandemic.
An H&M spokeswoman said the global retailer planned to close another two of its 49 Australian stores in March – H&M Townsville and H&M Rockhampton – after it closed its Chatswood store in January. She denied that as many as seven stores could close.
The store closures follow a global review of H&M’s store operations. “While we acknowledge the impact this will have on our colleagues as well as local communities, we see these store consolidations as vital in ensuring the long-term growth and success of the company,” the spokeswoman said. “It is part of our daily business to always make sure that we have the best location, the best business deal and optimise our store portfolio.”
H&M closed a net 58 stores around the world in 2020 and plans to close 350 this year, mainly in established markets, while opening 100, mostly in developing markets. H&M’s global net sales fell by 18 per cent in the 12 months ending November 2020, dragging profits down 88 per cent, as stores around the globe were forced to close and locked down consumers spent less on fashion and footwear. In the June quarter, about 80 per cent of the group’s 5000 stores were temporarily closed, forcing it to ramp up its online business and digital marketing and renegotiate store leases. In Australia, sales fell by 17 per cent to about $316 million in local currency terms during the year ending November and fell 7 per cent to about $90 million in the fourth quarter. H&M’s Australian online store started trading in October, seven years after the retailer entered the local market amid a wave of foreign fast fashion arrivals including Zara and Topshop.
As a result of the second wave of the pandemic, more than 1800 H&M stores were forced to temporarily close towards the end of 2020 and net sales between December and January 2021 fell 23 per cent.
“With strong, profitable online growth and good cost control we succeeded in ending the year in profit and with a strong financial position,” chief executive Helena Helmersson said last month, when the annual results were released.
“Taking decisive measures quickly, combined with an attractive customer offering, led to a better recovery than expected up until the second wave of the pandemic struck,” she said.
“Our measures to mitigate the negative effects of ongoing restrictions and closures are continuing. Although the situation at the time of writing is highly challenging, the H&M group stands strong.”