Things for retail have not been easy and what is happening now with H&M is a clear example of what hundreds of brands around the world suffer from.
As regards this new health crisis, the impact of the coronavirus is expected to be major for the retail sector. At least that’s how a recent report by GlobalData exposes it, which reveals that global spending in the retail industry falls by 3 percent during 2020, equivalent to approximately 549 billion dollars.
In that sense, it is worth quoting data from the US Census Bureau, which warns that the category with the strongest drop in sales has been that of clothing and accessories, with a sales contraction of 78.8 percent; followed by electronics, which has had a sales contraction of 60 percent; while the home furnishings and accessories category has seen a 58 percent contraction.
H&M in search of a restructuring
In the midst of this context, H&M released the results for its second quarter, where, for the first time in its history, it reports losses, which will lead it to close more than a hundred stores.
The one that is considered the second largest fashion group in the world, only behind Inditex, accounted for losses (before taxes) by $ 695 million between March and May, compared to a profit of $ 5.9 billion a year before.
With these results, H&M shares in Stockholm fell more than 4 percent, with which the value of their ballots has accumulated a loss of 27 percent so far this year.
Given the volatile and uncertain climate that crosses hundreds of markets around the world, the brand did not offer any details about what they expect for the third quarter.
« It is incredibly uncertain how economies open up, » Chief Executive Officer Helena Helmersson told ., while stressing that « it is tremendously difficult to say what the results will be. What is encouraging now is that the recovery in sales is picking up in June. ”
What did happen was a restructuring regarding its points of sale. H&M announced the closure of 170 stores worldwide, as well as 130 more, for a total of 40 net closings in FY2020.
With this, the expansion plans of the firm are simply suspended and with numbers down.
It’s not the only one
The closing of stores seems to be the constant in the « new normal » of the retail sector, which will be accompanied by a series of layoffs.
Given this scenario, various retailers are projected to close more than 9,300 stores this year in the United States alone.
With this, the situation that was already visible in the sector will worsen. Last year, prior to the coronavirus pandemic, real estate company Cushman & Wakefield estimated that up to 12 thousand large chain stores They could close in 2020.
Just a few hours ago, Macy’s just announced the firing of 3,900 employees comp part of a restructuring of its business to counteract the impact that the pandemic had on its income and sales, while in recent weeks, Inditex confirmed the closure 1,200 stores in all the markets in which it has a presence.
For many brands in the sector, the output will be to adapt more quickly to the digital environment; However, the speed with which this form of marketing must be optimized could put many large companies in trouble.
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