H&M is the latest victim of an alarming shift in consumer behavior
The retail giant has had a challenging few months, which has had a negative impact on its profits.
Well known clothing retailer H&M (HNNMY) , which operates over five hundred stores in the U.S., is commencing to feel the brunt of a first-rate change in consumer behavior.
The retailer just revealed in its third-quarter earnings report for 2024 that its customers are commencing to pull back on their spending, and which is having a negative impact on sales.
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Within the course of the third quarter, H&M’s net sales across all regions declined by Three%, compared to the same time period in 2023. In North and South The u.s. specifically, sales contracted by 2%. The company’s operating profit, which is how a lot money a firm has left after paying expenses, also decreased by 26%.
“Consumers’ living costs have remained high right through the year, and on the same time we continue to see turbulence in the arena around us,” said H&M CEO Daniel Ervér in the report. “External factors have impacted our sales revenue and buying costs greater than we expected.”
The retailer also claimed in the report that cold weather in “key” European markets negatively impacted sales in June. Michael M. Santiago/Getty Images
As H&M faces a slump in sales, the retailer is planning to refurbish about 250 of its stores across the globe and can close more stores than it plans to open.
“After reviewing priorities in the case of things that do not toughen the H&M brand or contribute to each brand’s long-term sales and profitability, additional stores have been identified for consolidation,” said H&M in the earnings report. “For 2024 the plan is to open around A hundred new stores and close around 200 stores, making a net decrease of around A hundred stores. Various the openings shall be in growth markets, while the closures will mainly be in established markets.”
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No matter dwindling sales, H&M believes that sales in September will enlarge by eleven%, compared to the same time period last year, end result of the its “o.k. received” autumn collection, which is fronted by celebrities equivalent to Charli XCX, Lila Moss and Arca.
It appears that the retailer may even be planning to lower prices at its stores since it expects for the pricetag of markdowns to enlarge year-over-year right through the fourth quarter.
Consumers are ditching retailers for 2nd-hand apparel
As many consumers across the usa are battling high inflation and a far better cost of living, many have been cutting their spending on apparel and have instead opted to buy 2nd-hand clothing items.
In step with a recent report from online thrift store ThredUp, it found that customers, on average, plan to buy 7% less apparel at full price in 2024 than they did in 2023. Also, Fifty five% of shoppers say that if they don’t see an improvement in the economy, they’ll spend an increased proportion of their apparel budget on secondhand clothing.
The report overall predicts that the secondhand apparel market in the U.S. shall be valued at $A hundred and fifty billion by 2028. Currently, which is worth $A hundred billion.
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