H&M explains Philippine impact of global store closures

MANILA, Philippines — Swedish clothing retail giant Hennes and Mauritz (H&M) adressed concerns if their Philippine stores would be affected by the company's plan to shut down 250 of its around 5,000 stores worldwide in 2021, while only opening 100 new ones, as the coronavirus pandemic pushes more shoppers online.

In a letter sent to Philstar.com, H&M Philippines Communications & Press Head Dan Mejia admitted that while the brand's sales in the Philippines has been badly hit by the pandemic, it remains "uncertain" if their local branches will be affected by the closures.

"In the Philippines, although the future remains uncertain and recovery is yet to be in sight with lower foot falls and selling performance as a result of the quarantine measures being implemented by our national and local governments to slow down the spread of COVID-19, we are still looking at expanding offline and online in the coming years to keep adapting to the demands and changing needs of our customers," Mejia said.

Although he confirmed reports that H&M is shutting down stores to harness their online shopping efforts, he said that physical stores are still "incredibly important."

In fact, he said, they have even recently launched their sister brand Monki in SM Megamall and Mall of Asia.

"The store closures mentioned in our nine-month report is part of our continuous store portfolio optimization globally and it differs from market to market. The figure is on an aggregated level and we cannot go into details on concrete numbers or markets at this point. Our physical stores remain incredibly important and we want to ensure that we have the right stores in the right locations. We see that our physical stores and strengthening our online presence complement each other to meet customers’ needs and give them the experience that they are clearly showing us they want to have."

During the pandemic, Mejia said they have also started to look into other "marketplaces" such as e-commerce site Zalora, in which H&M will be available from October 1 until November 30.

"The rapid changes in customer behaviour have been accelerated by COVID-19. The H&M group is therefore now stepping up the pace of its transformation," the company said in its quarterly report.

Net profit for the period from June to August came in at 1.8 billion Swedish kronor ($201 million, 172 million euros), compared to 3.9 billion kronor for the same period a year earlier.

Revenue fell 18.7% to 51 billion kronor.

At the same time online sales, which currently only represent a quarter of total sales, grew by 28% during the third quarter in local currencies.

Pre-tax profit came in at 2.4 billion kronor, an improvement over the 2.0 billion kronor reported in preliminary results published in mid-September.

"Our recovery is going better than expected... With more full-price sales than expected and strict cost control, we returned to profit already in the third quarter," CEO Helena Helmersson said in a statement.

In its second quarter H&M posted a net loss of some five billion kronor, compared to a net profit of 4.6 billion a year earlier while revenue halved to 28.7 billion kronor.

At midday on the Stockholm stock exchange, shares in H&M were up 7%.

Fashion retailers, especially fast-fashion brands like H&M, have been hit hard by the ongoing pandemic. 

In mid-April, the Scandinavian company temporarily closed around 80% of its stores worldwide.

Currently, 3% or 166 shops remain shut.

"During this pandemic situation, our priority has always been the health and safety of our colleagues and customers, and we will continue to follow the instructions of our local authorities to help fight the spread of COVID-19 in the country, as well as remain agile and flexible to adapt to the ever changing needs of our customers in the Philippines," Mejia assured their customers. — Reports from Agence France-Press