Karl-Johan Persson speaks during a news conference in Stockholm. Picture: REUTERS
Karl-Johan Persson speaks during a news conference in Stockholm. Picture: REUTERS

Stockholm — On Friday, Swedish clothing giant Hennes & Mauritz (H&M) said sales fell below expectations in the fourth quarter and it would close more stores as customers increasingly prefer to shop online.

H&M CEO Karl-Johan Persson said in a statement that the company’s "online sales and sales of the group’s other brands continued to develop well" but that physical stores "were negatively affected by a continued challenging market situation with reduced footfall to stores due to the ongoing shift in the industry".

Sales between September and November dropped by 4% compared to the same period last year to 50.4-billion kronor. In local currencies, sales fell by 2%.

"The numbers are really, really bad," Joakim Bornold, an economist at the investment bank Nordnet, told the daily Svenska Dagbladet. "I can’t remember when H&M had a quarter in which the sales fell."

At 2pm GMT, the company’s share price plunged by nearly 13% on Stockholm’s stock exchange.

"To respond even quicker to customers’ fast-changing behaviour, the company’s ongoing transformation journey is being accelerated," Persson said. "This includes continued integration of the physical and digital stores, and intensifying the optimisation of the H&M brand’s store portfolio — leading to more store closures and fewer openings."

The group did not specify exactly how many stores would be closed or where. H&M had announced earlier this year that it would open physical stores around the world to compensate for the downturn due to fierce competition from online sales platforms.

H&M group, which owns other popular brands such as COS, Monki and Weekday, had 4,553 physical stores around the world as of August 31.