Fashion retailer H&M (HM-B.ST) is looking to close 250 brick-and-mortar stores by 2021 as it sees a consumer shift to online shopping.
H&M said the coronavirus pandemic has sped up the digital shift for consumers, making it necessary for it to accelerate its store closing plan. The company said a net decrease of 50 stores will occur in 2020, with 350 stores to close in 2021. This will create a net decrease of about 250 stores as just over 100 new locations will open in the same year. H&M previously announced it would be closing 170 stores in 2020.
Based on the impact of the coronavirus, H&M said it renegotiated or exited about a quarter of its rental leases as it looks to improve rental terms at its stores. The company is the first retailer to announce store closures in October and follows location closure announcements by American Eagle, Century 21, Bed Bath & Beyond, GameStop, and Sur La Table in September.
“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,” Helena Helmersson, CEO at H&M, said in a statement. “Demand for good value, sustainable products is expected to grow in the wake of the pandemic and our customer offering is well-positioned for this. We are now accelerating our transformation work so that we continue to add value for our customers.”
Helmersson continued: “More and more customers started shopping online during the pandemic, and they are making it clear that they value a convenient and inspiring experience in which stores and online interact and strengthen each other. The substantial investments made in recent years have been very important for our recovery and we are now accelerating our transformation work further to meet customers’ expectations.”
H&M temporarily closed stores in March because of the coronavirus pandemic. The company said its sales fall 19% during the third quarter, to 50.8 billion Swedish krona ($5.7 billion) compared to a year earlier.
But the company saw online sales increase by 27% for the quarter over Q3 2019. Pre-tax revenues were about 2.4 billion krona ($265.7 million).
The store closures account for about 5% of H&M’s more than 5,000 locations, The New York Post reported.
Shares of H&M were trading at $163.85 as of 11:01 a.m. EDT, up $9.10 or 5.88%.