The popular high street fashion brand H&M plans to axe a number of stores in a bid to boost profits for the group. Over the past nine months, the retail giant has already closed 135 shops, and plans another wave of closures in the coming months. On Wednesday, the company revealed that the increased number of branches being shut are part of its cost-reduction strategy.
The brand has closed stores worldwide, with the majority occurring in Asia, Oceania and Africa. In Western Europe, 21 shops closed their doors for good this year in a major blow to British shoppers. The Swedish retailer hopes to enhance the company’s profitability further through lower operating costs. While the exact number of new closures are yet to be announced, H&M confirmed the axing of stores will continue.
In the quarter ending in August, the fashion giant hit operating profits of £390 million, which is a huge increase by over £100 million compared to the same period last year.
In the last quarter, the European company saw an increase of sales by 2% to £4.51 billion, despite operating with fewer stores. The higher margins show success in the retailer’s cost-cutting strategy.
Chief executive Daniel Erver said the H&M is “taking further steps in the right direction”, and emphasised the importance of maintaining value for customers during a time of economic uncertainty.
He said: “Through a stronger customer offering, an improved gross margin and good cost control, we have strengthened operating profit compared with the same quarter last year.”
Mr Erver added: “The increase in profit shows that we are on the right track as a result of the progress we have made in our plan.
“In an environment of ongoing uncertainty with cautious consumers, all of us within the H&M group are consistently focusing on our customer offering, always giving the best value for money.”
The H&M group CEO noted the fashion giant’s wider ambitions for the business, outside of financial gains.
“Our strong culture, together with good cost control and flexibility, allows us to continue building a stable foundation for long term, profitable and sustainable growth in an increasingly complex environment, while taking additional important steps towards our ambitious sustainability goals,” he said.
