H&M Cuts 135 Stores Globally as Profits Surpass Expectations

Fashion retailer H&M has announced a significant restructuring effort, closing 135 stores worldwide as part of its cost-cutting strategy. This move comes as the Swedish company reports stronger-than-anticipated profits for the quarter ending August 2023.

The closures, which occurred over the past nine months, primarily affected locations in Asia, Oceania, and Africa. Additionally, 21 stores in Western Europe were also impacted, particularly those branded under H&M and Monki. As the company seeks to enhance its profitability, further reductions in store numbers are anticipated in the current quarter.

Sales growth accompanies these closures, with H&M reporting a revenue increase of 2% to 57 billion Swedish krona (approximately £4.51 billion). Operating profits reached 4.91 billion Swedish krona (around £390 million), marking a notable rise from 3.51 billion krona (about £280 million) a year earlier. This figure exceeded analyst predictions and represented a rebound after declines in the previous two quarters.

Company Leadership Highlights Positive Trends

CEO Daniel Erver emphasized the company’s commitment to adapting in a challenging economic landscape. He stated that H&M is “taking further steps in the right direction,” while acknowledging that consumer behavior remains cautious due to ongoing economic uncertainties.

Despite the reduced number of stores, the retailer has seen positive consumer feedback for its autumn clothing lines. Erver noted, “Through a stronger customer offering, an improved gross margin, and good cost control, we have strengthened operating profit compared with the same quarter last year.”

The increase in profitability indicates that H&M’s strategic adjustments are yielding results. Erver expressed confidence in the company’s direction, stating, “The increase in profit shows that we are on the right track as a result of the progress we have made in our plan.” He reiterated the importance of delivering value to customers amidst a competitive retail environment.

Commitment to Sustainability and Long-Term Growth

H&M’s leadership also emphasized the importance of sustainability as part of their long-term vision. Erver highlighted the company’s strong culture, cost management, and flexibility as essential components in building a stable foundation for sustainable growth.

As H&M navigates an increasingly complex market, the company aims to take additional steps toward its ambitious sustainability goals, ensuring that it remains competitive while addressing consumer needs. The ongoing adjustments reflect H&M’s proactive approach in a retail landscape marked by change and uncertainty.