H&M shares plummeted after the Swedish apparel chain lost more ground to Inditex’s Zara, amid a crisis in brick-and-mortar stores that threatens to undermine retailers with underdeveloped online businesses.
H&M reported the biggest drop in quarterly sales in at least a decade as fewer customers visited its flagship brand’s locations, leading the company to pare expansion plans and consider closures. The stock fell up to16%, the steepest intraday decline since March 2001.
A crisis that has shuttered shopping malls in the US is spreading to other parts of the world, hitting H&M’s earnings and forcing the retailer to cut prices to clear out inventory.
Rival Inditex has been outpacing the Swedish company as it expands more aggressively in e-commerce. The Spanish company this week reported a double-digit rebound in revenue growth for November and early December. H&M reported “quite possibly the worst quarterly sales performance on record,” said Raymond James analyst Cedric Lecasble.
Sales excluding Vat fell to $6bn (€5.1bn) in the three months to November, the Stockholm-based fashion retailer said. H&M’s sales have declined in only three quarters in the past 10 years.
It said it aims to accelerate a plan to better integrate physical and digital stores, and it will give more details on changes at a February meeting with investors. The retailer said online sales and revenue of brands other than H&M have been going well.