(Bloomberg) -- Hennes & Mauritz AB said governments aren't doing enough to help as three-quarters of the Swedish clothing retailer's stores remain shut due to the coronavirus pandemic, making job cuts necessary.
Sales fell 46% in local currencies in March, the first month of H&M's second quarter, which the fast-fashion maker said will be unprofitable. The company is considering ways to raise debt financing to improve its liquidity as it reduces working hours for tens of thousands of employees. The stock, which has lost a third of its value this year, gained 6% as of 9:10 a.m. in Stockholm.
The crisis is striking H&M just as the retailer started to see some light at the end of a tunnel after a four-year downturn. The company just got a new chief executive officer at the end of January, when Helena Helmersson replaced the grandson of H&M's founder. To show some solidarity, she imposed a 20% temporary pay cut on top management.
Helmersson said Friday H&M appreciates the support measures that countries have announced to help retailers, though more will be needed.
H&M needs to make tough choices, reviewing costs in purchasing, investments, rents and staffing. The retailer said 1,000 store leases are up for renegotiation this year, and it has been threatening to withhold rent payments and step out of some contracts. H&M said it aims to cut operating costs by as much as 25% in the second quarter.
Stock-in-trade declined by 12% adjusted for currencies to 37 billion kronor as H&M has spent years trying to reduce an inventory buildup that has weighed on results. The company warned inventory will increase temporarily, though that should return to normal as demand recovers.
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