Coronavirus outbreak has been heavily affecting H&M business model. Consequently, the fast fashion Swedish group closing 250 stores to reduce costs and promote transition towards digital experience. Of course, when one says that the pandemic has been fostering the expansion of online channel sales, you may surmise that even physical retail has been deeply hit by the pandemic effects. Considering that the brand made its own fortune thanks to the opening of lots of selling stores all around, in different areas, while quickly changing and reassembling collections, social distancing therefore entails full reconsideration of their core strategy.
Closing 250 stores
While announcing the forthcoming closure of several stores, they made public the group’s quarterly results. Earlier in 2020 H&M decided to stop the activity of 50 selling stores, as they have been focusing on transformation into digital experience. In 2021, they are going to cut 5% of their 5,000-store network. Moreover, the Swedish group must also work out one more problem, as reported by several press agencies: they will have to clear out, in the next four years, unsold goods stockpiled in their warehouse.
To recover from crisis
Financial data are obviously negative. Nevertheless, at Stockholm headquarters they look at the bright side of such difficult situation: despite the fact that earnings dropped by 19%, at the end of the quarter, in August, in September revenues were down 5%, which they consider to be an early sign of recovery: “We are still facing a demanding challenge – commented Chief Executive Officer Helena Helmersson –. Yet we believe that the worst is behind us and we are therefore confident we will manage to recover from crisis”.
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