The problem with fashion is that it’s fickle and people’s tastes change, the demand for things can drop quickly, and yesterday’s success story can be tomorrow’s struggling brand.
Even long-time retailers like Gap have moments when it’s hot and others when they’re on the wrong side of current trends. Fast fashion, it had to be somewhat protected from that because of the changed nature of its sales cycle.
“By focusing on very low prices and shortened production cycles, fast fashion gets new trends to customers very quickly – and creates huge environmental and social challenges,” according to McKinsey and Company’s What is Fast Fashion.
In theory, a retailer like H&M can stay on top of current trends and move away from downturns quickly.
What the retail giant didn’t count on, however, were cheaper digital competitors with lower costs, so they could charge less, while being able to move faster.
“Fast fashion retailers have consolidated their position in the American market: retailers like Shein and Temu are now the main fashion market in the United States – fast or otherwise,” according to McKinsey’s The State of Fashion 2025.
H&M has closed more than 600 stores by 2022, with 136 closings in the past six months. In addition, the chain closed many standalone stores of its Monki brand while switching select locations to its weekday brand.
H&M has been slowly shrinking
While it also opened more locations, H&M Group closed 2022 with 4,702 stores and finished the first half of 2026 with 4,038, a loss of 644 locations. The series finishes every year at that time with fewer places than the previous year.
“At the beginning of the second quarter there were 163 fewer stores than the same period last year and at the end of the quarter there were 128 fewer stores than the same period last year,” H&M shared in its six-month earnings report.
The company also closed the Monki brand, folding some of its products into the Weekday brand.
“The comparison with last year is affected by the closure of all Monki stores in 2025. At the beginning of the second quarter last year there were 43 Monki stores, and 32 remained at the end of the quarter,” said the merchant.
“Sales for the quarter were somewhat lower than planned, while profits and stock trading conditions improved. Profitability improved and inventory increased. production is in line with our long-term mission to lay the foundations for sustainable and profitable growth,” he wrote in a letter inside the earnings report.
Monk shops are closed
In 2023, H&M paired Monki, its label targeting a younger audience, with its Weekday brand to “create a youth-focused brand hub,” according to Fashion Network.
Meanwhile, the retailer has also shared that it is bringing back its Cheap Monday range.
“Different Weekday and Monki styles will be offered, as well as Cheap Monday, which will return with a variety of jeans,” confirmed the company in a press release.
“To develop Weekday into a youth destination, the Monki brand will be integrated into the Weekday unit. This will improve customer engagement and reduce administrative and operational costs, freeing up resources to continue to focus on improving product experience and a strengthened overall offering,” the company shared.
At the time, however, H&M insisted that Monki would once again exist independently.
“Monki’s unique weekday and brand experience will remain, at the same time as new opportunities with integrated customer experiences will be explored,” it added.
That decision was reversed in 2024, and all Monki stores closed at the end of 2025, although the brand remains part of the Weekday product line.
The closing of Monki to Midweek also reflects a wider change at H&M. Rather than expanding its product portfolio, the retailer is simplifying its business to reduce costs and focus its marketing resources on a few ideas.
Monki was managing 56 stores when the decision was made to close the brand.
H&M has closed hundreds of stores over the past few years.Shutterstock
H&M is facing an online challenge
Shein and Temu are digital world brands that can undercut H&M in price and speed because they don’t need to pay retail stores or worry about their supply.
“H&M’s online channel hasn’t experienced the same number of store closures as many other channels,” said Sofie Willmott, head of apparel at GlobalData, told RetailDive in response to a previous batch of H&M store closures.
“In the second half of the year we will start developing a digital infrastructure that will support our development. The new infrastructure will provide better decision support, faster processes and greater accuracy in the way we plan our assortment and share trading,” he wrote.
H&M has been working to provide a unique store experience specific to the market in which it operates, reports PYMNTS.com.
“Customizing the shopping experience based on the local community’s needs and preferences is a way for stores to create a sense of familiarity and connection. This personal touch has the opportunity to strengthen the bond between the brand and consumers,” the website shared.
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The strategy seems to be designed to use a network of stores around the world in a way that Shein and Temu cannot match.
“Small, community-oriented stores can offer a selection of products that match local tastes and trends. Employees in these joint stores are more likely to understand the community, which allows them to provide personalized recommendations and customer-oriented services,” added PYMNTS.
H&M is facing sustainability storms
“The global fast fashion industry in 2026 represents one of the most important conflicts in the modern consumer economy. It remains a sector defined by very fast production and unprecedented digital involvement, but at the same time it is facing an ongoing shift towards forced stability and circulation,” writes Marketing Analyst Shayaike Hassan.
He shared that H&M has tried to push back on the issue of sustainability in many ways.
H&M has positioned itself as a leader in light and the circular economy.
It consistently ranks high on the Fashion Transparency Index compared to Zara (its leading brick-and-mortar competitor) and publishes a detailed list of its Tier 1 and Tier 2 suppliers.
H&M’s Global Clothing Collection program allows customers to recycle old clothes of any brand for discount vouchers, promoting a circular mindset.
“Transparency is the public disclosure of information that holds decision makers accountable. In the fashion industry, it means sharing information about supply chains, business practices and their impacts on workers, communities and the environment,” according to the Fashion Transparency Index.
Activists remain skeptical.
“The devil is in the data,” Lubomila Jordanova, a sustainability expert, told WWD.com about H&M’s sustainability report — noting missing production data means the brand may be underreporting “50% of the truth” of its total emissions.
McKinsey’s report explored the depth of the sector’s problem, although it did not address H&M directly.
“One estimate suggests that consumers treat low-cost clothing as almost disposable, throwing it away after only seven wears. Of the five clothes produced, as many as three end up in landfills or incinerated each year,” according to McKinsey.
H&M also has trouble getting stuck in the middle compared to its competitors, Bernstein analyst William Woods told Business of Fashion.
“The business model is still very slow. They are still moving in six-month periods, they are not very close and they do not really guarantee the freshness of the product. Zara puts the product in the stores once a week.
H&M remains profitable, but its challenge has shifted from competing with Zara to competing with a new generation of digital-first retailers who can move faster and operate at lower costs.
The company’s shrinking store base reflects an effort to adapt, but whether those changes are enough is uncertain.
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This story was originally published by TheStreet on Jun 28, 2026, where it first appeared on Selling part. Add TheStreet as a Preferred Source by clicking here.
