H&M says to close down Cheap Monday brand by year-end
Cheap Monday may have suffered a long period of uninspiring results but the news on Tuesday that parent company H&M is to axe the brand by the end of the year was something of a shock.
It said the decision came after it had seen “a negative trend in Cheap Monday’s sales and profits for a long time.” It added that the brand’s store in London, as well as its online store, will close on December 31.
The parent company, which has been struggling to return to meaningful growth across its wider operations, said the fashion industry “is in a period of extensive change as a result of ongoing digitalisation.” At the same time, it said the group’s “transformation work is continuing at a fast pace, with the company prioritising and focusing on its core business. Cheap Monday has a traditional wholesale business model, which is a model that has faced major challenges due to the shift in the industry.”
So what happens now? As mentioned, the store and webstore will only continue to operate for another five weeks, but the roughly 80 employees at the firm’s operations in Sweden (in Tranås and Stockholm) could stay around for longer. H&M said it’s in talks “for all employment contracts to be terminated during 2019” and this should be complete by next June.
Anna Attemark, Head of New Business at the H&M group, said: “We need to constantly develop our business and what we choose to invest in. We see very good opportunities and great potential for all of the other brands within New Business, which all are developing positively both digitally as well as through physical stores.”
And the firm’s insistence that its other businesses have potential is important as we’ve become used to H&M opening brands, not closing them in recent years so it seems further closures aren’t planned.
Analysts will probably applaud the move and the firm’s shares edged up slightly on Tuesday as the markets signalled their approval of the decision to focus on more profitable labels.
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