H&M closes 28 stores in Spain, cutting nearly 600 jobs

H&M closes 28 stores and cuts 600 jobs in Spain

H&M is closing 28 stores in Spain, leaving nearly 600 workers unemployed. The announcement, first reported by El Mundo, was labeled urgent and lacked a public list of affected locations. While tempting to view this as a consumer downturn, the reality is more complex: some chains are selling more than before yet still shutting down.

What has H&M announced and how many employees are affected?

The company confirmed the closure of 28 outlets and the departure of nearly 600 staff members. Currently, there is no public list of impacted cities, fueling uncertainty among employees who do not know if their store is on the list or when closures will occur. Details on managing closures with active customers and remaining staff have also not been clarified.

A troubling aspect is the timeline. Weeks prior, unions and management reached a preliminary agreement ending store strikes in exchange for increased staffing. This deal, sold as adding personnel, now coexists with 600 job losses, creating a difficult contradiction.

Why is H&M closing despite nearly 20% higher sales?

Because higher sales do not guarantee higher profits. The chain accumulated almost two years of losses, and early 2023 reports indicated a 67% drop in net profit despite sales rising around 20%. Factors cited include soaring electricity bills, increased transport costs, and higher sourcing prices. As margins shrink, every square meter of store space shifts from an asset to a liability.

This challenges the simple narrative that people have stopped buying. They are buying, but differently and elsewhere, while physical retail continues to bear the structural costs of a model designed for a different economic cycle.

Competition that pays no rent

The shift toward e-commerce and second-hand markets explains much of the gap. Amazon, Temu, Shein, and AliExpress, alongside resale platforms like Vinted and Wallapop, capture low-cost, impulse, and repeat purchases without the overhead of lit storefronts or paid staff.

It is not just about price, but opportunity cost. One buyer noted reducing annual clothing spend from 1,000 euros to 100: a full wardrobe, stable size, and no urgency to replace items. The segment that grew through constant rotation has run out of fuel.

Benetton, Primark, and the emptying commercial map

H&M’s closures occur in an already shifting landscape. In some areas, the disappearance of chains like Benetton forces shoppers to travel more than 20 kilometers to buy clothes in physical stores. Each closure reduces competition, makes in-person shopping more expensive, and leaves vacant premises on streets that relied on them.

At the opposite extreme, regarding minimum prices, some describe a survival scenario: thefts are tolerated because security alarms cost more than the garments themselves, and margins cannot absorb losses. This is anecdotal rather than statistical, but it highlights the pressure on a model that can no longer even afford security guards.

Advertising controversy and the cost narrative

Some consumers attribute the decline to campaigns antiestéticaturing models far removed from traditional buyers, arguing that advertising lost its appeal and ultimately hurt revenue. Critics counter that these customers exist, purchase, and are as profitable as any others, insisting the issue lies in margins, not marketing. Similar strategies have reportedly been adopted by other domestic chains.

Concurrently, a cost-driven thesis circulates. Increases in the minimum wage, tax pressure, and production shifts to lower-cost countries explain why companies across sectors are restructuring their presence in Spain. Within this framework, store closures are a bottom-line decision, not an accident.

Above all looms a political interpretation: some see each such announcement as proof of deterioration not reflected in official indicators. It is an interpretation, not data, but it shapes much of the conversation.

Given these figures, prudence suggests expecting further announcements rather than fewer. The list of affected locations remains unpublished, timelines are unsettled, and staff at other chains watch nervously. If this pattern repeats, the next statement will likely carry the same 'urgent' label and unanswered questions.