H&M closes stores in more European markets, December-February sales fall 24% in China

H&M, the world’s second-biggest fashion retailer, said on Monday it was evaluating all its activities and temporarily closing stores in 12 more markets due to the coronavirus as it reported a 24% quarterly sales slump in China.

The Swedish group said in a statement that sales in the second half of the December-February period, its fiscal first quarter, were negatively impacted by the coronavirus outbreak, mainly in China, while in March sales were taking a hit mainly in Europe.

“While the H&M group’s transformation work continues at full speed, all activities in the company are now being carefully evaluated – including from a cost and risk perspective – so as to be able to mitigate the negative effects associated with the virus as far as possible,” it said, adding it would give more information in its full quarterly earnings report due April 3.

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Shares in H&M fell 8% in early trade, taking a year-to date slide to 35%, and versus a 5% fall in the wider Stockholm market.

H&M said it was temporarily closing stores in Poland, Spain, the Czech Republic, Bulgaria, Belgium, France, Austria, Luxembourg, Bosnia-Herzegovina, Slovenia and Kazakhstan, and also some stores in Greece, due to the virus.

It last week closed all its stores in Italy, but has reopened most of its stores in China.

Peers Nike Inc, Lululemon Athletica Inc and Under Armour Inc on Sunday said they would close stores in the United States and other markets due to the spread.

H&M’s quarterly sales rose 8% to 54.9 billion crowns ($5.65 billion) from a year-earlier 51.0 billion, roughly in line with analysts’ average expectations according to Refinitiv data Measured in local currencies, sales growth was 5%.

“While this is a good release in our view, with possibly Q1 sales a touch better than feared, the overall outlook into Q2 remains highly uncertain for the sector and overall global consumer,” analysts at JP Morgan said in a note to clients.

H&M makes the bulk of its sales in Europe, with Germany its single biggest market, followed by the United States. It sources most clothes from suppliers in China and other Asian countries.