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The number of store closures by Hennes & Mauritz AB will surge to the highest level in at least two decades this year as the Swedish fashion giant tries to adapt to a new digital world where customers abandon physical stores and increasingly shop online.
In 2018, the clothing retailer expects to close 170 shops and open a total of 390 new ones, the biggest number of store closures since at least 1998.
That’s equivalent to a ratio between closures and new stores of 44 percent, meaning H&M will close 44 stores for every 100 it opens. In 2017, that ratio was just 19 percent. Between 1999 and 2017, the average was only 12 percent.
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The store closures mean H&M’s net shop additions will drop to just 220 this year, the lowest level since 2010. The pace of store growth will slow to just 4.6 percent in 2018, from an average of 12 percent between 1999 and 2017.
Investors earlier on Wednesday gave a thumbs-down to H&M’s turnaround plan that included the store closures and the creation of a new brand to sell marked-down clothing. The shares slumped as much as 9.9 percent.
