H&M have announced disappointing sales data for Q4 2017, citing changing consumer behaviour and a reduced footfall to stores, and store closures are now very much in the pipeline.
On the morning of Friday 12, 2017, the Swedish multinational clothing retailer Hennes & Mauritz – commonly known as H&M – announced its Q4 performance results. While group sales overall have grown year on year the worrying indicator is a 4pc decline in pre-VAT sales versus Q4 2016, from SEK 52.7bn to SEK 50.4bn. The company vaguely cited “a continued challenging market situation…due to the ongoing shift in the industry”, which appears to translate to a shift away from traditional shopping methods in favour of online shopping.
The concept of purchasing clothing online – without the option to try on beforehand – has grown rapidly in recent years and has certainly taken H&M and many other clothing retailers by surprise.
When announcing Q3 results in September 2017, CEO Karl-Johan Persson explained that the company would be closing 90 stores during the year and further closures now seem likely. Q4 results were released alongside a plan to intensify the “optimisation of H&M brand’s store portfolio – leading to more store closures and fewer openings”.
Q1 2018 results will ultimately decide the fate of the retailer’s worst performing stores as that period includes the critical Christmas trading period. However, today’s announcement covers the Black Friday week which many retailers have described as the best Black Friday for sales to date.
Struggling stores will have the Christmas trading period to prove themselves worthy and survive the latest purge, but with online retail growing rapidly physical stores seem increasingly likely to be a thing of the past.