H&M Cancels Store Expansion Plans, Focuses On E-Commerce And Local Markets
Hennes & Mauritz has rescinded plans to expand its footprint by opening 10% to 15% more stores on an annual basis.
Usually an announcement like this follows weak quarterly performance, but in H&M's case it was the contrary. Strong earnings and sales growth this quarter led the retailer to rethink its growth strategy. Instead of focusing on its sprawling real estate, the fashion retailer will focus its efforts on local markets and boosting online sales growth, the Wall Street Journal reports. The moves comes after H&M’s Q4 results show it struggled in traditionally strong markets, including Europe, China and the U.S., despite doing well in emerging markets like India and Mexico.
H&M said net profits jumped to $669M in Q4, up 7% from the year before, and ended 2016 with 427 more stores than it operated in 2015. Despite the growth and strong results, H&M net income is down almost 11% from 2015, which the company said is due to markdowns and higher purchasing costs. [WSJ]