Overseas H&M reports a 34 percent drop in fourth-quarter profit. The chain has plans to close stores as stock slides to a nine-year low.
Bloomberg reported today that Swedish fashion chain H&M is to close 107 stores as well as adding a cheaper line called Afound into its business model. The first Afound store will be in Stockholm, and the site will go online in Sweden this year. With Afound, H&M is building a format where it can funnel off excess inventory.
The world’s second-largest clothing retailer said it would invest more in online sales and digital inventory-tracking technology, while adding shops in markets that are still growing.
H&M's shares fell as much as 9.1 percent to a nine-year low Wednesday in Stockholm. They have lost more than a quarter of their value in the past three months.
H&M’s operating profit fell 14 percent to 20.6 billion kronor in the 12 months through November, the biggest drop in six years.
The company has struggled to cut inventory, which ended the year higher than planned, and H&M said it will increase markdowns by as much as 2 percent in the first quarter to clear that out.
Despite the drop, the company still plans to open 390 new stores, with a quarter of those being side-chains other than the flagship H&M, such as COS, Monki and Afound.
H&M has been in hot water already in 2018, with the company losing celebrity collaborator The Weeknd over a racially insensitive hoodie that drew backlash and calls for boycotts of the chain.