H&M Group is executing a major strategic overhaul, prioritizing the quality and profitability of its retail footprint over sheer volume. The company's plans for 2025 reveal a significant net reduction in physical stores: a planned 190 store closures will be partially offset by 80 new openings, leading to a net closure of 110 locations. This aggressive rationalization strategy comes as the fast-fashion giant aims to improve operational efficiency after a reported 42% drop in Q1 2025 operating profit, a figure heavily impacted by high inventory costs and macroeconomic slowdown.

Streamlining the global footprint

The majority of the closures will target underperforming, smaller-format stores in mature Western European and North American markets, where retail penetration is already high and the transition to online shopping is advanced. This is exemplified by the complete physical phase-out of the Monki brand's standalone stores, integrating its offerings solely onto digital platforms and select multi-brand Weekday locations. H&M CEO, Daniel Ervér, emphasized that this is a "deliberate move to secure a profitable and sustainable growth trajectory," signaling a shift from blanket expansion to highly targeted, high-return investment.

Investing in the omnichannel future

While the gross number of closures (190) is high, the 80 new stores and substantial investment in existing flagships underscore a belief in a hybrid omnichannel future. The new locations are strategically placed in high-growth areas, particularly in emerging markets like Latin America and Southeast Asia, and are designed to be larger, technologically integrated "experience hubs." By shedding unprofitable physical assets and maintaining a rigorous focus on digital sales (which now surpass 30% of total revenue), H&M is aligning its real-world presence with modern consumer behavior and the demands of its $400 million inventory challenge.