H&M warns about potential UK leases early exit unless sales revive
Swedish fashion giant, H&M has issued its landlords an ultimatum that it will abandon store leases if it does not see its turnover return to pre-Coronavirus levels after the global health crisis is over.
In the last week, a growing number of retailers are asking their landlords for a rent holiday as lockdowns and social distancing measures across the globe have stopped shoppers from visiting high streets.
H&M, which has 305 stores in the UK, is pushing for waivers on rent and service charges for the second quarter of the year.
The Swedish retail group wrote to landlords asking them to agree to terms which could see it break a store lease with one month’s notice if trading conditions did not return to pre-outbreak levels.
A H&M spokeswomen said: “This is an extreme situation and H&M group is working extensively to manage the Covid-19 situation, the highest priority being the safety of employees and customers."
“All activities in the company are now being carefully evaluated – including costs and risk perspective – to be able to mitigate the negative effects associated with the virus as far as possible."
“We cannot go into specific details, but our intention is to handle this extraordinary period in the best way possible and work with our long-term partners."
“We see it as a joint responsibility between us and our partners to ensure a financially stable and sustainable future for our businesses.”
H&M is the world's second largest retailer and made £1.24 billion worth of sales in the UK last year. The UK is the company's third largest market and has been a major focus for its expansion. Store numbers have risen from 50 in 2001 to more than 300 now.
The company also warned this week that it will have to cut jobs and cancel its dividend because of the Covid-19 outbreak, which has closed more than two-thirds of its 5,000 shops worldwide.