Mar 28, 2025, 12:01 AM
Mar 27, 2025, 1:05 PM

H&M faces challenges after significant store closures

Highlights
  • H&M reported a 2% increase in net sales for the quarter, totaling 55.3 billion Krona.
  • The retailer closed 40 stores, including 35 H&M brand stores and five Monki shops.
  • Despite the challenges faced, H&M's CEO believes improvements will lead to better performance in the coming months.
Story

In Sweden, H&M reported weaker sales and a drop in profits for the latest quarter, ended on February 28. Net sales for H&M increased by 2% compared to the previous year, reaching 55.3 billion Swedish Krona. However, in March, the growth slowed to just 1% due to ongoing pressures on consumer finances, reflecting a challenging retail environment. H&M’s decision to close stores was part of a broader strategy to streamline operations, leading to 40 net closures during the quarter, which included 35 closures of H&M brand stores and five Monki shops. The gross profit for H&M for this quarter was slightly down at 27.2 billion Krona, compared to 27.7 billion Krona in the same period the previous year. Daniel Erver, the CEO of H&M, indicated that profitability was negatively impacted by a decrease in gross margin resulting from several external factors. These included increased markdowns and significant investments intended to enhance the overall customer experience. Erver expressed some optimism about the future, noting that the second quarter's negative impact would likely be smaller due to continuing improvements in their operations and cost control measures. Despite these struggles, Erver mentioned that H&M is making progress in enhancing its assortment of female clothing. He claimed that these efforts are beginning to positively influence sales. However, he acknowledged that the first quarter tends to be the weakest for the company in terms of sales and profit margins. H&M aims to navigate through these financial challenges while pursuing growth strategies, emphasizing the importance of adapting to changing consumer behaviors. The retail sector is becoming increasingly competitive, and businesses like H&M are forced to rethink their strategies amidst changing market dynamics. The decision to reduce the number of physical stores reflects a growing trend as many retailers shift towards online sales in response to consumer preferences. Through careful planning and investment in their e-commerce capabilities, H&M hopes to regain market strength and improve profitability in the quarters ahead.

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