H&M closing hundreds of stores as pandemic accelerates online shift

'We believe that the worst is behind us,' CEO says

Clothing giant H&M plans to close hundreds of stores next year as the COVID-19 pandemic accelerates a shift to online shopping.

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The world’s second-largest fashion retailer announced the move on Thursday, according to AM New York, following a smaller than anticipated drop in third-quarter profit.

H&M BOUNCES BACK FROM CORONAVIRUS SLUMP

Although H&M has expanded its reach globally over the past couple of decades, it has begun closing more brick-and-mortar stores and opening fewer of them. The Swedish fast-fashion firm is aiming to cut its numbers by 250 in 2021, representing  5% of its current network.

The portfolio shift comes even as H&M, like rivals, begins to recover from pandemic-related shutdowns and an economic slump.

“Although the challenges are far from over, we believe that the worst is behind us and we are well placed to come out of the crisis stronger," Chief Executive Helena Helmersson said.

Market leader Inditex, the owner of Zara, reported a return to profit in its May-July quarter.

Analysts at JPMorgan Chase say the H&M's third quarter was better than expected and executives were able to manage well "what they could directly influence.

"The market is still not fully appreciating the improved quality of H&M's business model and infrastructure," they added. "This set of results is further proof that H&M's turnaround is still very much well on track.”

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H&M’s shares rose 7.1% Thursday afternoon in New York trading. Its profit fell to 2.37 billion crowns -- or around $265.6 million -- from 5.01 billion crowns a year earlier, according to a statement.

Its September sales were reportedly down 5% year-on-year in local currencies after they fell 19% in the three-month span through August.

Only 3% of H&M's more than 5,000 stores worldwide remain closed, compared with about 80% at the height of lockdowns.

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