H&M Plans to Shutter 170 Stores This Year as Sales Halve and Profits Are Wiped Out

H&M is permanently shuttering even more stores this year.

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.

“As we have reopened our stores, sales have begun to recover at a faster rate than expected,” CEO Helena Helmersson said in a statement. “To meet the rapid changes in customer behavior caused by COVID-19, we are accelerating our digital development, optimizing the store portfolio and further integrating the channels.”

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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.

“During the pandemic, it became clear how important it is that the digital and physical channels interact to meet customers’ needs,” Helmersson added.

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.