H&M has “paid the price for being late to the party online” this year seeing its full year sales drop nearly 20 per cent.
According to GlobalData’s retail analyst Emily Salter, H&M’s failure to invest in its online operations has left it lagging behind rivals whose ecommerce sales have been able to offset in-store sales declines due to lockdown closures.
It comes after H&M’s fourth quarter results revealed a 15 per cent sales decline to £4.68 billion, following another 18.7 per cent sales dip in the previous quarter.
According to H&M, UK-wide lockdowns saw sales drop 22 per cent between October 22 and November 30.
The world’s second-biggest fashion retailer said sales in the quarter fell to 52.5 billion krona (£4.68 billion) from 61.7 billion krona a year earlier, with sales in local currencies down 10 per cent.
“Though H&M is still expected to outperform a number of players in the apparel market in 2020 such as Primark and Marks & Spencer, its online channel has not been able to offset store closures as much as other multichannel retailers,” Salter said.
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“Key competitor Inditex today reported a net sales decline of -13.5 per cent for its Q3 (August to October), in line with H&M’s performance, but online sales growth of 75 per cent for the nine months ending 31 October will have outshined H&M (40 per cent in Q2, 27 per cent in Q3).”
Salter added that social distancing measures are likely to continue throughout the first half of 2021, continuing to dampen footfall and ensure online penetration remains at between 30 and 40 per cent in the UK and US.
“This makes it increasingly important for H&M to reduce the size of its excessive store estate,” she continued.
“The retailer has paid the price for being late to the party online in FY2019/20, so it must rapidly align its online proposition with competitors to avoid a repeat of this next year.”