H&M Group is planning to close 30 Spanish stores in a move that would eliminate roughly 1,100 jobs.
The Swedish retail giant’s decision to shutter 27 H&M-branded stores and 3 Cos locations in Spain is part of a global restructuring that will slightly offset 350 planned closures worldwide with 100 new brick-and-mortar outposts through 2022.
“H&M has the intention to maintain as many jobs as possible,” it said in a statement. “In order to mitigate the impact of these measures, it will be prioritized whenever possible the option of voluntary terminations, it will be offered certain relocations and transfer possibilities, and it will be implemented an outplacement plan for those employees who finally will have to leave the company.”
On Tuesday, H&M notified the employee union in Spain that it plans to enact a “collective dismissal.”
The fast-fashion chain cited retail’s swift digitization and evolving consumer habits as factors fueling the store rationalization. “We need to adapt to changing customer behavior and needs in order to be able to remain competitive,” it said. “We consider all these changes as a vital step in ensuring the long-term sustainability of our business.” It will continue investing in strategic stores and in digital, and will plant new locations where it sees “great potential” to meet new customer demands.
The Swedish retailer has seen many of its stores in Europe either impacted by lockdowns or by restrictions on business hours as countries strive to try to stem the pace of infections during the ongoing coronavirus pandemic.
In H&M’s 2020 annual report published Tuesday, CEO Helena Helmersson noted that temporary store closures last year impacted 4,000 of its 5,000 stores, forcing the company to rely on digital for sales. By the end of January, however, just 1,800 stores, or 36 percent, were still closed due to restrictions, she said.
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“By accelerating the digital shift in the industry, the pandemic also hastened our need for a skills shift, with an increased need for online, tech and logistics skills while the opposite is the case for operations in the physical stores. This affected many of our employees and therefore meant difficult decisions had to be taken, but these were absolutely necessary in order for the business to adapt to the ever faster changes in the world around us,” she wrote.
H&M found itself bolstering its liquidity and cash on hand by scaling back some of its approved investments and redirecting resources to digital and supply chain infrastructure, Helmersson added.
“With the majority of the stores closed, we strengthened our focus on the digital sales channels further—and since we had expanded online sales globally, our customer offering remained available in many markets,” Helmersson said.
She said Covid-19 heightened awareness around the importance of sustainable development and the need for local relevance. Demand for good value and sustainable products is expected to stick around for the long term, Helmersson added, noting that flexible supply chains are a must given today’s rapidly evolving landscape.