FILE PHOTO: The H&M clothing store is seen in Times Square in Manhattan, New York, U.S., November 15, 2019. REUTERS/Mike Segar/File Photo
STOCKHOLM (Reuters) – Sweden’s H&M (HMb.ST), the world’s second largest clothing retailer, said on Monday it had decided to scrap its proposed dividend due to the coronavirus outbreak, and that it was reviewing all parts of its operations, including all costs.
The historic move by H&M to scrap its dividend comes with 68% of its stores currently closed as the coronavirus outbreak is hitting the global clothing retail industry relentlessly.
“At the moment, a total of 3,441 of the group’s 5,062 stores are closed, which together with subdued demand in the markets that are still open, has had significant negative impact on sales so far in March,” the company said in a statement.
H&M said several measures were being taken in respect of buying, investments, rents and staffing, among other areas.
“Dialogue about temporary layoffs has been initiated in a number of markets and will be followed by further temporary
layoffs in other markets that are impacted by the corona situation,” it said.
“Globally, this is likely to affect tens of thousands of employees in all parts of the business, although it is not currently possible to specify the exact number”.
The company added it was also looking a whether it may need any permanent staff cuts due to the negative impact of the corona situation on the business.
H&M shares were down 3% by 1236 GMT on Monday, strengthening somewhat following the news. Its shares are still down around 40% this year.
Reporting by Johannes Hellstrom; editing by Niklas Pollard and Louise Heavens