Fast-Fashion Giant H&M’s Sales Reflect New Competition

H&M store

H&M’s struggles continued this week with sales figures suggesting increased pressure from fast-fashion rivals.

The Swedish retailer said Thursday (Dec. 15) that net sales for its fourth quarter were up 10%, and up 12% for its full financial year.

However, these numbers were reportedly below what analysts had expected, causing H&M’s stock to dip Thursday morning.

H&M finds itself in a crowded field these days, with fast-fashion competitors such as Zara and Shein seeing increased sales.

Zara parent Inditex reported earlier this week it had seen sales rise by 19% for the first nine months of the year, and it said it had opened stores in 30 markets.

Online clothing retailer Shein, meanwhile, said in October it expected to generate revenue of nearly $24 billion and gross merchandise value (GMV) of $30 billion this year. The company is also reportedly weighing a shift to a marketplace-style platform that would let other retailers sell their merchandise along with Shein’s own products.

H&M’s sales figures arrive two weeks after H&M announced it would eliminate 1,500 jobs, a decision the company projected would save it $195 million, according to a news release.

“The cost and efficiency program that we have initiated involves reviewing our organization, and we are very mindful of the fact that colleagues will be affected by this,” CEO Helena Helmersson said in the release. “We will support our colleagues in finding the best possible solution for their next step.”

Meanwhile, H&M’s most recent earnings report showed that — by the end of the year — the company expects to have opened around 89 stores and closed around 254. That amounts to a net decrease of 165 stores worldwide and doesn’t even take into account the end of its Russian operation, which cost the company 2.1 billion krona ($204 million) earlier this year.

While H&M didn’t say exactly where the closures would be concentrated, European countries are certainly among those that have lost stores. That’s in keeping with a report from Britain’s Daily Mail that 20% of H&M branches have shut their doors in the U.K. since the company’s pre-pandemic heyday.

And as the company put it, “most of the openings will be in growth markets, while the closures will mainly be in established markets.”

“In other words,” PYMNTS wrote earlier this week, “while emerging economies like Ecuador and Guatemala have welcomed the retailer for the first time in recent months, H&M is on the back foot in closer-to-home European markets.”

For all PYMNTS retail coverage, subscribe to the daily Retail Newsletter.