H&M closes all stores of its subsidiary brand, GAP plans to open 50 new stores in China

H&M Group recently released its results for the first quarter of fiscal year 2026. Compared with the same period last year, revenue decreased by 1% to 49.6 billion Swedish kronor (about RMB 36.0 billion) in local currency terms. Measured in the reporting currency, it fell by 9%, mainly due to the combined effects of store shrinkage and currency fluctuations. At period end, the total number of stores decreased by 163 compared with the same period last year, a drop of about 4%, including the closure of all offline stores of its Monki brand. However, profitability still shows a certain degree of resilience, with a gross margin of 50.7% and operating profit up 26% year over year to 1.512 billion Swedish kronor (about RMB 1.1 billion).

The Group has clearly stated that it will continue to advance a store optimization strategy that runs store shrinkage and expansion in parallel. In 2026, it plans to close about 160 stores and open about 80 new ones, with a focus on ramping up investment in the Latin America market. It also plans to enter new markets such as Paraguay and Malta. In addition, the mid-to-high-end brand lines, including Arket and COS, are being tasked with more important global expansion missions. The Group will also increase its investment in creativity and restart the H&M Design Awards, covering 25 countries and more than 60 schools, to further strengthen brand appeal and nurture emerging design talent.

For the full fiscal year 2025, the Group’s net sales for the period ended November 30 of last year increased by 2% year over year to 228.285 billion Swedish kronor (about RMB 165.6 billion). Compared with another fast-fashion giant, ZARA’s parent company and the Inditex Group, the growth rate is slightly less. For fiscal year 2025, the Inditex Group’s full-year sales increased by 3.2% year over year to 39.864 billion euros (about RMB 315.2 billion). On a constant-currency basis, growth was 7%, achieving a fourth consecutive year of increase. Net profit hit a record high as well, rising 6% year over year to 6.22 billion euros (about RMB 49.2 billion).

Growth is even more pronounced for Spain’s fast-fashion brand MANGO. In fiscal year 2025, its revenue grew 13% year over year to 3.8 billion euros (about RMB 30.0 billion). On a constant-currency basis, it grew 16%. Net profit rose 11% to 242 million euros (about RMB 1.9 billion), and multiple key indicators reached record highs. At the end of last year, MANGO China opened its first flagship image store in Shenzhen at Sea World Culture Park. This marks the brand’s return to China’s mainland offline market after a two-year absence. Industry insiders believe that amid intensifying competition in fast fashion, thanks to solid financials and channel layout, MANGO is expected to maintain its 2026 revenue target of 4.0 billion euros. (Previous report: MANGO’s revenue last year was nearly RMB 30 billion; from closing all but one store to returning to the Chinese market)

Meanwhile, the U.S. fast-fashion brand GAP is also regaining momentum in the China market. Its China operator, Baozun E-commerce, recently announced that the brand plans to open about 50 new stores in 2026 across Tier 1 to Tier 3 cities on mainland China, and will return to the Hong Kong market later this year. It is understood that since early 2023, after handing over its Greater China business to Baozun E-commerce, it has advanced a localized “China-for-China” strategy. After three years of adjustments, product design is led by local teams, and operational efficiency has been improved through supply-chain and digital capabilities. The business has achieved breakeven and has formally entered a new round of accelerated expansion cycle.

Baozun E-commerce’s 2025 fiscal report shows net revenue of RMB 9.9 billion, up 6% year over year. For the first time, the GAP brand under its umbrella delivered quarterly profitability. This once-shrinking American fast-fashion brand is trying to rebuild its growth curve in China. In 2024, GAP China opened 51 new stores, and in 2025 it opened 29 new ones, bringing the total number of stores to 164. Full-year sales grew by more than 20% year over year, and the company plans to raise that pace to 30% over the next two years. According to a previous report by Southern Metropolis Daily, in July last year, Baozun E-commerce completed the acquisition of Sweaty Betty’s China business of the UK yoga-wear brand. (Previous report: Baozun E-commerce acquired a lululemon competitor and previously restructured the GAP China market)

With consolidation increasing across the global fast-fashion industry in 2025, the strong are getting stronger. But facing global economic uncertainty, tariff pressure, and rising costs, similar to luxury brands, the fast-fashion industry is also undergoing a collective transition from “scale expansion” to “tightening while keeping big openings.” At the same time, the EU’s ESPR regulations (the Ecodesign for Sustainable Products Regulation) are being enforced, pushing the use rate of environmentally friendly materials by apparel companies to 30% or more. “Sustainability” will shift from a marketing concept to a core strategy. Fast fashion may also be entering a new competitive stage of “high-quality, low-frequency.”

Nandu N Video reporter Wang Xin