H&M Group is planning to shutter 28 stores and lay off nearly 590 workers in Spain, the Swedish retailer confirmed Friday.
Two of the country’s trade unions, Comisiones Obreras and Unión General de Trabajadores, first revealed the news to Reuters, noting that the company is downsizing for unspecified organizational, productivity and economic reasons.
The closures target more than one-fifth of H&M’s 133 stores in Spain, where it employed almost 4,000 workers in 2022, according to its latest annual report.
In a statement from a spokesperson, H&M said that having stores in the right locations and staying competitive was a priority and that it is “consistently” assessing its store portfolio, something that involves “enhancing the shopping experience in our existing stores, actively seeking out new opportunities and making informed decisions about closing stores when necessary.”
The move comes barely a year after the Cos and Monki owner announced that it was trimming its overall workforce by roughly 1,500 positions in an effort to tame administrative and overhead costs.
“The cost and efficiency program that we have initiated involves reviewing our organization and we are very mindful of the fact that colleagues will be affected by this,” CEO Helena Helmersson said at the time. “We will support our colleagues in finding the best possible solution for their next step.”
The job losses are part of a larger trend of cuts designed to streamline operations and return inflation-battered businesses to pre-Covid levels of profitability. Boohoo, Fruit of the Loom, Levi Strauss and REI have all revealed layoffs within the past week. Amazon, eBay, Etsy, Fantatics, Macy’s, Nike, Renewcell, VF Corp., Wayfair and a host of logistics providers have also been rocked by reductions.
In December, H&M characterized fourth-quarter net sales from September through November as “flat” compared with last year, amounting to 62.6 million Swedish kroner or nearly $6 million. In total, the company’s net sales dropped by 4 percent in local currencies compared with the corresponding quarter last year.
For the financial year covering Dec. 1, 2022, to Nov. 30, 2023, net sales increased by 6 percent to 236 billion kroner, or $22.6 billion. A full-year report will be published at the end of the month.
The unions said that H&M in Spain had faced problems with absenteeism and workers complaining of being overburdened. But they noted that the layoffs are “too aggressive and it is possible to look for solutions which don’t imply job losses.”
Earlier this month, the Spanish government said that it would be raising the mandatory minimum monthly pay by 5 percent to 1,134 euros ($1,232), effective retroactively to Jan. 1. Because Spain disburses its wages in 14 installments every year, this amounts to an annual floor salary of 15,876 euros ($17,247).
But H&M “never showed any weird behavior and was complying with a pay raise agreed last year,” the unions said, referring to an agreement the company made to pay shop assistants in Spain an extra 1,000 euros ($1,086) for 14 months, plus additional monthly bonuses linked to sales performance for the next two years, following walk-outs by disgruntled employees last June. Workers had claimed that H&M paid less than its major rivals, including Inditex-owned Zara, which is headquartered in Spain.
Spain accounts for 3.7 percent of H&M’s global workforce, according to its 2022 report.
