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STOCKHOLM – H&M has warned it expects to make tens of thousands of lay-offs, as it decided to cancel its annual dividend amid the rapid spread of COVID-19. In a remarkably frank briefing, the company said discussions about temporary layoffs have begun in a number of markets.

“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 said. “The company is also reviewing the potential need to terminate employment due to the negative impact of the corona situation on the business.”

The board of directors at H&M has also called for this year’s dividend to be cancelled. “The rapid spread of the coronavirus COVID-19 and the extraordinary public measures taken around the world to slow down the spread of the virus have caused an exceptional situation for people, communities and businesses,” the company said in a statement,

“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.

“The company is therefore reviewing all parts of its operations, including all costs. Several measures are being taken in respect of buying, investments, rents and staffing, among other areas. The situation is being reviewed market by market based on local conditions.”

Stefan Persson, chairman of the board, added: “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 SEK 9.75 per share, approximately SEK 16 billion in total, and is instead proposing to the 2020 annual general meeting that no dividend is paid. I am convinced that this is the best decision in this situation in order to further strengthen the company’s already strong financial position and thereby secure our freedom of action going forward.”

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