H&M is ramping up the pace of store closings in 2020 as it shifts focus to its online business to reflect changing consumer shopping habits in the wake of the coronavirus pandemic.
On Friday, the Swedish fast-fashion giant reported sales results for the first half of the year. Net sales were down 24% in local currencies between December 1 and May 31, and 50% during the second quarter thanks to the majority of its stores being closed during the lockdown.
Meanwhile, online sales across its brands were up 32% in local currencies between March 1 and May 31.
The company said it is taking action to trim its store fleet at a faster pacer, closing 170 stores this year – which is 40 more than it had originally planned – and cutting back on new store openings. This will result in a net decrease of 40 stores, it said.
It is doing so because it expects the pandemic to have a long-lasting impact on shopper behavior and to ultimately see more sales shift online.
"It is clear that the rapid changes in customer behaviour caused by the pandemic will further speed up the digitalisation of fashion retail," H&M Group CEO Helena Helmersson said in the earnings release on Friday.
"To meet this, we are continuing to adapt the organisation and improve our ways of working, which will make us more flexible, fast and efficient. We are accelerating our digital development, optimising the store portfolio and further integrating the channels," she said.
A spokesperson would not provide a breakdown of which brands will be impacted by store closings.
H&M is not alone in its move to place greater emphasis on online sales post-COVID. Inditex, which owns Zara and Massimo Dutti among other brands, announced earlier this month that it is also closing between 1,000 to 1,200 stores over the next two years as it expects online sales to account for a quarter of its business by 2022.
Analysts are also expecting the pandemic to have a lasting impact on how consumers shop and that more people that have become accustomed to shopping online will stick with it.
"Online sales are likely to remain more highly penetrated than they were before and this is something brands will need to assess," Neil Saunders, managing director of GlobalData Retail, said in an email to Business Insider.
Saunders said that retailers who offer an omnichannel experience are best positioned for the future. "The losers will be those retailers that are less adept in multichannel and which have large store estates which are increasingly irrelevant," he said.