H&M Hennes & Mauritz AB, owner of the H&M fashion brand, on Dec. 15 said it planned to accelerate its transformation, including the closure of more stores, after reporting disappointing fiscal fourth-quarter sales.
The Swedish apparel retailer said it had continued to grow in the fiscal year ended Nov. 30, 2017, but "the growth was dampened by the fact that the sales development in the fourth quarter was significantly below the company's own expectations."
H&M reported that sales excluding value-added tax in the period from Sept. 1 to Nov. 30 fell 4% year over year to 50.39 billion Swedish kronor from 52.72 billion kronor in the same period in 2016. In local terms, sales declined 2%.
Sales including VAT dropped to 58.45 billion kronor from 61.10 billion kronor.
In early morning trading in Stockholm on Dec. 15, H&M's shares were down 25.10 kronor, or 12.5%, at 175.20 kronor.
October was a particularly tough month for clothing retailers as unseasonably warm weather allowed shoppers to delay purchases of winter garments. Rival Industria de Diseño Textil SA, owner of the Zara brand, on Dec. 13 reported sales for the three months to Oct. 31 that fell short of expectations, but it indicated that it was back on track in its fiscal fourth quarter.
For the year ended Nov. 30, H&M's sales excluding VAT increased 4% year over year to 199.99 billion kronor from 192.27 billion kronor or 3% in local currencies. Sales including VAT rose to 231.74 billion kronor from 222.87 billion kronor.
The company, which operates more than 4,500 stores in 69 markets as well as 43 online platforms, said the quarter ended Nov. 30 had been weak for the H&M brand's brick-and-mortar outlets. It noted that they had been hurt by "a continued challenging market situation with reduced footfall to stores due to the ongoing shift in the industry."
In addition, it said there had been "imbalances" in parts of the H&M brand's assortment composition.
To more quickly address customers' changing behavior, H&M plans to accelerate its transformation, including continued integration of its physical and digital stores, and optimization of the H&M brand's store portfolio. This would lead to more store closures and fewer openings, according to the company.
Further details were not provided, but the company said it would do so at a capital markets day in Stockholm on Feb. 14, 2018. H&M will deliver its full-year report Jan. 31, 2018.
As of Dec. 14, US$1 was equivalent to 8.44 Swedish kronor.