Fashion retailer H&M said on Wednesday it would open far fewer stores in 2018 as it responds to the shift to shopping online and announced plans to launch a new outlet to sell external brands alongside its own ranges.
Following decades of rapid expansion, the world's second-biggest clothes group after Zara owner Inditex has struggled to respond to the growth of ecommerce. Its image was dented further last month by an ad slammed by many as racist.
H&M, in which the founding Persson family owns a 33 percent stake, reported an unchanged dividend but said it might give shareholders the chance to reinvest dividends by issuing new shares to help finance investments.
H&M shares, already down more than a third over the last year, fell 5.8 percent by 0905 GMT, making them the biggest losers on a flat European retail sector index.
H&M said it planned a net addition of about 220 stores in 2018, compared with 388 in 2017. Breaking down that figure, H&M plans to open about 390 new stores and close about 170, entering Uruguay and Ukraine for the first time.
"The scale of the reduction will surprise some today. And it will leave the bears questioning why H&M still enjoys a 'growth stock' rating," wrote Morgan Stanley analyst Geoff Ruddell and Amy Curry, who rate H&M "underweight".
The analysts noted that H&M had finished the year with net debt on its balance sheet rather than net cash for the first time in more than 20 years, with cashflow in the fiscal fourth quarter hurt by another increase in inventory.