PARIS — Hennes & Mauritz AB reported a loss in the first half due to business disruption from the coronavirus crisis, and outlined plans to focus on digital channels and speed store closures.
The Swedish fast-fashion retailer, which owns Cos, Monki, Weekday and & Other stories, as well as its namesake chain, said the loss after tax came to 3.06 billion Swedish kroner, or $328 million. Executives also flagged a faster recovery rate in recently reopened stores.
“As we have reopened our stores, sales have begun to recover at a faster rate than expected,” said chief executive officer Helena Helmersson in a statement.
Sales in June, through June 24, were down 25 percent in local currencies compared to the same period last year. Most of the label’s stores have reopened, but 350 stores, or 7 percent, remain closed.
While it is customary for fast-fashion retailers to revisit their global retail networks, culling underperforming stores and opening new ones, H&M said the pace of closures is being increased while openings will be reduced compared to previous plans, with around 170 closures and around 130 openings the works, resulting in a net decrease of around 40 locations.
Earlier this month, the Swedish firm reported sales of 83.61 billion Swedish kronor or $8.96 billion in the first half, down 24 percent in local currencies with the strongest impact from the COVID-19 crisis felt in the second quarter.
Rival Inditex is betting on digital prowess to navigate the choppy environment and is investing nearly 3 billion euros over the next two years in bolstering its digital platforms and integrating store and online stock. The Spanish retailer is also sticking to its strategy of culling smaller stores to focus on larger, spruced up flagships — COVID-19 disruptions have not called for a revision of this approach, executives said.
The lockdown period boosted online business at both Inditex and H&M, with the Spanish retailer noting e-commerce sales were up 50 percent over its last quarter, which started in February. Inditex expects the online channel to account for over a quarter of total sales in 2022, compared to 14 percent last year.
H&M said that online sales rose 32 percent in local currencies over the second quarter, showing further proof that consumers deepened their embrace of online purchasing while physical stores were closed.