H&M to shut Sanlitun store that marked golden era

Swedish fast-fashion brand H&M is closing its store in Beijing’s Sanlitun shopping district after demand failed to bounce back following an end to strict Covid-19 restrictions.

The brand has chosen not to renew its 10-year contract, which expires this year, with landlord Swire Properties. The store, which opened in 2014 and marked a golden era for H&M in China, occupies 1,200 square metres and has shaped Sanlitun’s skyline for nearly a decade.

H&M will, however, “explore new sites in Beijing and other Chinese cities to establish brand new flagship stores”.

“China has always been one of the most important markets for H&M,” the company said yesterday. “As the digital transformation of retail continues and customer shopping habits change, we will continue to optimise our store portfolio to best match each market.”

It comes almost a year after H&M shut its flagship store in Shanghai. The outlet in Middle Huaihai Road was the brand’s first and once biggest mainland shop. The company has closed a number of other stores in mainland cities, including Guangzhou, Hangzhou and Chongqing.

China’s zero-Covid policy might have hurt H&M’s business, but the brand also faced a nationalist backlash last year after it said it would stop using cotton sourced from Xinjiang. The brand said its stores reduced in number from 506 in 2017 to 445 in 2021. This tally fell to 360 stores last year, according to GeoHey, a Chinese market monitoring agency.

Globally, H&M’s stores have declined from 5,076 in 2019 to 4,456 last year. The company said it would shut more stores in “mature markets” this year.

In February, H&M announced its full-year results for the 2022fell-financial year, reporting net sales of 223.5 billion Swedish krona (HK$160 billion), a 6 per cent yearon-year increase. But net profit fell 68 per cent to 3.5 billion krona. Helena Helmersson, H&M’s CEO, said the performance was strongly influenced by the geopolitical situation and inflation.

“Our decision to wind down the business in Russia, which was an important and profitable market, has had a significant negative impact on our results,” she said in a results statement.

Other fast-fashion companies such as Zara and Gap have also faced challenges on the mainland, closing stores in several cities.

Gap sold its Chinese business to Baozun, a Shanghai e-commerce platform. Other companies, including Bershka, Pull&Bear, Stradivarius and Old Navy, have exited the mainland.

Japanese brand Uniqlo will, however, open around 100 new mainland stores this year.

Tadashi Yanai, the founder of Uniqlo, aims to establish 3,000 stores in China.

Swire Properties said it was finalising a rental agreement with a new tenant for the Sanlitun site, but did not give further details.