Yahoo Finance H&M to shut stores after 'unexpected' dip in sales
Global fashion retailer Hennes & Mauritz (H&M) will close stores after suffering its biggest drop in quarterly sales in 10 years.
The group, which owns Stockholm-based H&M as well as brands such as COS, Weekday and & Other Stories, said its sales excluding VAT fell 4pc to 50.4bn Swedish kronor (£5.94bn) in the three months to November 30, compared to the corresponding quarter last year. Analysts at Reuters had expected revenue to increase 2pc.
The retailer said that sales in its fourth quarter were "significantly below the company’s own expectations".
H&M shares fell 15pc in Stockholm following the announcement.
While H&M's online sales continued to grow, as did sales of the group’s other brands, it experienced weak sales in its bricks-and-mortar stores, and blamed "a continued challenging market situation".
The group said it would now be opening fewer branches and closing some existing stores, although it would not confirm which outlets would be affected. It is also extending a partnership with Chinese e-commerce giant Alibaba by selling the H&M brand on its digital platform Tmall.
Michael Evans, president of Alibaba Group, said: "As one of the world’s most innovative fashion companies, H&M is a perfect fit for Alibaba’s Tmall platform. We are honoured to expand our co-operation with H&M and host their flagship store, enabling H&M brands to engage with our half a billion consumers.”
H&M is the second largest clothing retailer in the world after Spanish-owned rival Inditex, the parent company of Zara, Massimo Dutti, Pull & Bear and Bershka.
Zara this week reported a 6pc jump in profits in the nine months to October 31, while sales rose 10pc to €17.96bn (£15.82bn) during the same period.
The fashion company now runs more than 7,000 shops globally after opening 30 new stores in 93 countries during the year.
