H&M to Shut a Fifth of Spanish Stores, Lay off 588 Workers

An H&M sign is seen at the entrance to an H&M store in Palma on the island of Mallorca, Spain June 14, 2019. REUTERS/Anna Ringstrom/ File Photo
An H&M sign is seen at the entrance to an H&M store in Palma on the island of Mallorca, Spain June 14, 2019. REUTERS/Anna Ringstrom/ File Photo
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H&M to Shut a Fifth of Spanish Stores, Lay off 588 Workers

An H&M sign is seen at the entrance to an H&M store in Palma on the island of Mallorca, Spain June 14, 2019. REUTERS/Anna Ringstrom/ File Photo
An H&M sign is seen at the entrance to an H&M store in Palma on the island of Mallorca, Spain June 14, 2019. REUTERS/Anna Ringstrom/ File Photo

Swedish fashion retailer H&M announced on Friday a plan to close down more than a fifth of its stores and lay off as many as 588 workers in Spain, home of its bigger rival, Zara owner Inditex, local unions said.
The company will carry out the layoffs for unspecified organizational, productive and economic reasons, unions CCOO and UGT said in a joint statement.
The company said it has 133 stores in Spain and employs almost 4,000 people there, according to H&M's annual report. The retailer confirmed in a statement sent to Reuters it intends to close 28 stores.
H&M said that having stores at the right locations and staying competitive was a priority, and that it was "consistently" evaluating its store portfolio.
"This involves ... enhancing the shopping experience in our existing stores, actively seeking out new opportunities and making informed decisions about closing stores when necessary," it said, without providing further details on why it decided to close the stores.
The move is in keeping with other big fashion retailers around the world that have closed smaller stores in recent years while expanding flagship branches that draw more traffic and can double as e-commerce logistics centers.
H&M in Spain has also faced problems with absenteeism and workers complaining of work overload, according to union sources.
In November 2022, H&M announced a global plan to cut 1,500 jobs to trim costs. In Spain, it had already reduced its payroll by 400 people in 2021.
"We believe the measure is too aggressive and it is possible to look for solutions which don't imply job losses," the unions said.
Negotiations with the unions in Spain are due to start in September. H&M said it had already informed the union and that it would work closely with it.
Angeles Rodriguez, a CCOO leader, said the unions were surprised by the announcement of layoffs.
"The company never showed any weird behavior and was complying with a pay raise agreed last year," she said. H&M granted significant pay increases last year after workers protested and went on strike.
H&M is the world's second-largest listed clothing retailer behind Inditex and is a fixture in malls and high streets the world over.



Birkin Bag Maker Hermes End of Year Sales Jump

A Mimosa Matte Mississippiensis Alligator Birkin handbag by Hermes is pictured during an auction preview at Sotheby's in Geneva, Switzerland, November 7, 2024. (Reuters)
A Mimosa Matte Mississippiensis Alligator Birkin handbag by Hermes is pictured during an auction preview at Sotheby's in Geneva, Switzerland, November 7, 2024. (Reuters)
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Birkin Bag Maker Hermes End of Year Sales Jump

A Mimosa Matte Mississippiensis Alligator Birkin handbag by Hermes is pictured during an auction preview at Sotheby's in Geneva, Switzerland, November 7, 2024. (Reuters)
A Mimosa Matte Mississippiensis Alligator Birkin handbag by Hermes is pictured during an auction preview at Sotheby's in Geneva, Switzerland, November 7, 2024. (Reuters)

French luxury group Hermes reported an 18% rise in fourth quarter sales on Friday, showing robust appetite from wealthy shoppers for the most expensive luxury items like its Birkin bags, which cost upwards of $10,000.

Hermes continues to outshine rivals like LVMH and Kering-owned Gucci thanks to its wealthier customers as the industry suffers its slowest sales in years. Global luxury sales fell around 2% last year, hurt by a property crisis crimping spending in China and inflation-weary shoppers elsewhere.

"We are celebrating an excellent year, in a tougher environment," Axel Dumas, executive chairman, told journalists on a call.

Sales for the fourth quarter came to 3.96 billion euros ($4.14 billion), an 18% rise at constant exchange rates, accelerating in the important end of year period, with the fastest growth in the Americas and Japan.

The growth beat analyst expectations for a 10% rise, according to a Visible Alpha consensus cited by UBS.

The Hermes leather goods and saddlery division, which accounts for nearly half of group revenue, grew the fastest, up 21.5%. Analysts had expected a rise of 13%.

The double-digit growth at Hermes contrasts with LVMH's 1% rise over the last three months of the year.

Hermes also reported 9% growth in sales in the Asia region excluding Japan, the label's biggest market, despite the downturn in traffic in Greater China seen since the end of the first quarter of 2024.

Dumas added, however, that it was "too early to see an inflection" in the industry, despite some positive signs.

Hermes is known for its tight grip on production, sticking to an annual increase of around 6-7% a year, with order backlogs cushioning it from falling demand while holding up the label's exclusive aura.

Sales in the Americas region clocked 22.3% growth, matching growth in Japan.

Asked about the impact from potential US tariffs on European goods, Dumas said the company would not adjust its production.

"We are attached to keeping our production where it is," he said, citing France for leather goods, Switzerland for watches and Italy for shoes.

"We'll adapt to tariffs, and raise prices accordingly," he added.

The company is raising prices 6-7% this year to reflect higher production costs and exchange rates, Dumas added.