COVID-19 impact: H&M scraps dividend, warns it may cut thousands of jobs

Hennes & Mauritz AB has announced through a statement that due to the rapid spread of the coronavirus and its impact on the business, the company is reviewing the situation market by market based on local conditions. H&M said, dialogue about temporary layoffs has been initiated in a number of markets and will be followed by further temporary layoffs in other markets that are impacted by the corona situation. The company has also decided to suspend its earlier announced dividend proposal.

The company said: “globally, this is likely to affect tens of thousands of employees in all parts of the business, although it is not currently possible to specify the exact number. The company is also reviewing the potential need to terminate employment due to the negative impact of the corona situation on the business.”

COVID-19 impact - H&M cancels dividend “Since we on the board of directors presented our original dividend proposal, the market situation has changed drastically. In the light of the current situation and the uncertainty about market developments, the board has today decided to withdraw its earlier dividend proposal of 9.75 Swedish krona per share, approximately 16 billion Swedish krona in total, and is instead proposing to the 2020 annual general meeting that no dividend is paid,” said Stefan Persson, Chairman of the company’s board.

The company has temporarily closed all stores in several of the group’s largest markets including Germany and the US, while over the past weekend all stores in the UK were also closed. The company added that at the moment, a total of 3,441 of the group’s 5,062 stores are closed, which together with subdued demand in the markets that are still open, has had significant negative impact on sales so far in March.

“We are doing everything in our power in the H&M group to manage the situation related to the coronavirus. My hope is that we will be able to get operations up and running again as soon as possible and welcome back all our customers in all our 74 store markets. This is an extraordinary situation in which we are forced to make difficult decisions,” added the company’s CEO Helena Helmersson.

Picture:David Thunander for H&M