H&M Looks to Alibaba and China's Online Shoppers for Lifeline
Jiao Yongshang
/SOURCE : Yicai
H&M Looks to Alibaba and China's Online Shoppers for Lifeline

(Yicai Global) Dec. 21 -- H&M, whose stock price plunged the most in eight years after fourth-quarter sales fell, will open more stores on China's biggest e-commerce site to tap the country's vast internet spending power and help remedy the Swedish fashion retailer's underdeveloped online presence.

Two of Hennes & Mauritz AB's brands -- flagship H&M and H&M Home -- will debut on Alibaba Group Holding Ltd.'s Tmall marketplace next spring, the Stockholm-based company said. The two firms are deepening cooperation following the Tmall entry of Monki, H&M's women's clothing line that fuses Scandinavian cool with Asian street style.

H&M has been slow to develop digital channels compared with Zara, a rival fast fashion brand of Spain's Industria de Diseno Textil SA. Zara has its own e-commerce business and has linked up with third-party platforms.

As fewer customers visit physical stores -- a phenomenon that has spread around the world -- retailers heavily invested in bricks and mortar have suffered, including H&M. Last week, the company reported its biggest drop in quarterly sales in at least a decade.

Sales fell 4 percent to SEK58.45 billion (USD6.9 billion) in the three months ended Nov. 30, from a year earlier, sending the company's shares as much as 15 percent lower on Dec. 15, the day it released the figures.

Barclays PLC downgraded the company to 'underweight' last month, noting that the opening of new stores drove some of the firm's growth. Online and offline integration is "a challenge for H&M," RCC Capital Markets said in a note earlier this month.

The H&M group had 4,489 stores worldwide as of May, marking a 10 percent annual increase. H&M expanded its presence in second- and third-tier Chinese cities with new locations, but consumer acceptance and feedback has not been as the company envisioned, and the rising costs of physical stores may affect profitability.

Revenue at Zara owner Inditex rose 6 percent in the first nine months of the year compared with a year ago, with the group performing well in e-commerce, analysts said. It may be time for H&M to play catch-up.

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Keywords: Hennes & Mauritz AB , Tmall