H&M will shift its expansion strategy toward developing markets in fiscal 2019. The retailer plans to open a total of 335 stores, mostly outside the U.S. and Europe, and shutter 160 others. Europe will be hit hardest by the closures; H&M plans to reduce its footprint on the continent by approximately 50 locations.
The retailer improved net sales by 5% in fiscal 2018, but that improvement was lower than Wall Street expectations, according to Springfield News-Sun. Norway (where overall sales fell 4%) and the U.S. (down 2%) were two of the retailer’s most challenging markets, while 38% online sales growth in the UK offset a 1% brick-and-mortar sales decline, resulting in total sales growth of 8%.
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H&M drove growth in several markets with a combination of e-Commerce and physical retailing, including China (24%), India (43%) and Russia (27%). While the retailer didn’t detail where it would open new stores in the coming year, H&M said it will enter the Mexican and Egyptian markets via e-Commerce.
Approximately 240 of the new stores will be H&M locations, while the remaining stores will fall under the COS, & Other Stories, Monki, Weekday, ARKET and Afound banners. Additionally, three standalone H&M Home stores will open, and 25 of the other new stores will contain an H&M Home store-within-a-store.
While Europe will see a net loss of H&M stores, the retailer is still expanding its e-Commerce operations in the region. The company opened new logistics centers in Kamen, Germany and Stryków and Bolesławiec, Poland in fiscal Q4 2018. The facilities will increase capacity and enable faster deliveries in several European markets.
The expansion strategy is similar to what H&M underwent in fiscal 2018, when the retailer opened 336 stores and closed 143, less than the company’s initial estimate of 170 closures.
