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H&M focuses on fast-growth markets – and closes 50 stores in Europe

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H&M will focus on its fast-growing emerging markets and cut its store numbers in Europe in the coming year. The retailer expects to open a net 175 new stores this year, mostly in growth markets, while reducing its presence in Europe by 50 stores.

It was in these fast growth emerging markets that H&M’s sales grew fastest in the first quarter of its financial year – sales in India (+42%), China (+16%) and Poland (+15%) grew faster than those in the Northern European markets of Sweden (+11%) and the UK (+8%), while sales fell in Germany as the retailer moved its online business there to a new platform.

H&M now sells online in 47 countries – all now via a single online platform – and will add Mexico and Egypt, the latter via a franchise, to that total during 2019. It also plans to launch ecommerce sales in India later this year, but via India’s largest online marketplaces Myntra and Jabong rather than through its own websites. 

At the same time the fast fashion retailer is focusing on transformation as it integrates its digital and physical store businesses. It is testing new store formats and improving its online business through faster and more flexible delivery options and payments. By bringing online and the store together it aims to improve the customer experience. It’s also working with advanced data analytics and AI in order to make its supply chain faster, more flexible and more efficient. 

The update came as H&M, an Elite retailer in IRUK Top500 research, reported net sales of SEK 51.15bn (£4.2bn) in the three months to February 28, representing growth of 10% compared to the same time last year, or 7% in local currencies. Net profits came in at SEK 25.5bn (£2.1bn).

H&M chief executive Karl-Johan Persson said: “Our ongoing transformation work has contributed to stronger collections with increased full-price sales, lower markdowns and increased market shares.” He added: “The rapid transformation of fashion retail continues and we can see that our own transformation work is taking us in the right direction, even if many challenges remain and there is still hard work to do. The progress we have made in our strategic focus areas confirms that we are on the right track. Therefore we continue moving forward at full speed and we are optimistic about the future for the H&M group.”

Image: InternetRetailing Media/Paul Skeldon

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