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H&M Announces Bigger Focus on E-Commerce Expansion, Will Still Open 430 New Physical Stores This Year

It's also finally going to launch that new brand.
Shoppers wait in line at an H&M store opening in Melbourne. Photo: Graham Denholm/Getty Images

Shoppers wait in line at an H&M store opening in Melbourne. Photo: Graham Denholm/Getty Images

At the end of each year, high-street giant H&M makes sure to spell out just how much bigger it's going to get in the year ahead with grand plans to open, usually, upwards of 400 new stores — which works out to more than one store opening per day. At this point, this rapid growth strategy has gotten H&M to a whopping 4,300 physical store count worldwide across all of its brands. Granted, that's still fewer than Zara's parent company Inditex, which operates over 7,000 stores, though H&M is now growing at a slightly quicker pace.

In 2017, according to the Swedish retailer's latest earnings report, that pace won't be slowing down — it plans to open 430 new stores — but H&M is making e-commerce growth a much bigger priority, so much so that it's changing the way it talks about growth. So its "growth target" for 2017 — which is an increase of 10 to 15 percent — now includes stores and online markets. H&M will enter six new online markets this year — Turkey, Taiwan, Hong Kong, Macau, Singapore and Malaysia — and five new bricks-and-mortar markets: Kazakhstan, Colombia, Iceland, Vietnam and Georgia.

Most of the new stores will be H&M; 70 to 80 will be other brands. The company, which also owns Cos, & Other Stories, Cheap Monday, Weekday and Monki, also said it might reassess the mix of brands in its store portfolio, potentially relocating some and closing others. But back to the e-commerce thing: Here's how the company plans to further develop its online business:

Omni-channel strategy: This means you can expect more capabilities around picking up and returning online purchases in stores, mobile payments, and use of mobile in stores for customer service. 

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Supply chain: The goal is to make deliveries faster and more predictable. Expect the company to launch next-day delivery and time-slot deliveries in more markets.

Advanced analytics: This has more to do with the use of internal algorithms to better plan ahead and streamline operations.

But what we're most intrigued by, and dying to hear more details of, is that H&M plans to launch "one or two" new brands this year. The company has been teasing this since 2015 and there's plenty of speculation about what it — or they — might be: One report said a new brand will be "completely different" from H&M's existing brands; another, from last November, said one would be called P Eleven; according to Bloomberg, one brand could be online-only.

As for the company's financial performance last year, H&M managed to beat profit estimates in the fourth quarter after several quarters of de despite a challenging environment in Europe, with profits increasing to 7.41 billion kronor ($839 million). Profits were down for the full year, however. According to CEO Karl-Johan Persson, sales performance was lower than planned, which led to increased markdowns. Sales for the year rose by 7 percent in local currencies.

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