H&M plunges as re­tailer eyes dis­counts and store clo­sures to re­vive top line

Irish Independent - Business Week - - BUSINESSWEEK - ERICH ZANN

IN­VESTORS gave a thumbs-down to fash­ion gi­ant Hennes & Mau­ritz’s (H&M) turn­around plan, which in­cludes the big­gest store-clo­sure pro­gram in at least a decade and the cre­ation of a new for­mat to sup­ple­ment the Swedish cloth­ing com­pany’s stum­bling main chain.

The com­pany plans to shut 170 stores around the world this year, even as it adds a new for­mat called Afound to sell marked-down mer­chan­dise. The re­tailer said it would in­vest more in on­line sales and dig­i­tal in­ven­tory-track­ing tech­nol­ogy, while adding stores in mar­kets that are still grow­ing.

Shares fell more than 9pc to a nine-year low on Wednesday in Stock­holm. They have lost more than a quar­ter of their value in the past three months. The slump brings H&M’s mar­ket value to SKr235bn (€24bn), equiv­a­lent to about a quar­ter of what Zara owner In­di­tex SA is worth.

“There is lit­tle in the state­ment to sug­gest that H&M can reignite its top line any­time soon,” wrote Richard Cham­ber­lain, an an­a­lyst at RBC Cap­i­tal Mar­kets.

The world’s num­ber two fash­ion chain by sales has re­cently hit a num­ber of road­blocks, re­port­ing the big­gest drop in quar­terly sales on record. As on­line shop­ping has soared, fewer peo­ple are vis­it­ing H&M’s vast net­work of phys­i­cal stores. The com­pany has strug­gled to cut in­ven­tory, will in­crease mark­downs in the first quar­ter and ended the year with net debt for the first time in more than two decades. (Bloomberg)

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