H&M Bets on Brazil and India to Revitalize Growth Amidst Global Store Cuts

Fashion retailer H&M is actively pursuing expansion into dynamic emerging markets such as Brazil and India, a strategic pivot announced by CEO Daniel Erver. This move is designed to counteract the effects of weakening consumer spending in its core European region and the ongoing impact of U.S. tariffs on its second-largest market, the United States.

The push into new territories forms a critical part of Erver's broader strategy to revitalize H&M's performance and enhance profitability. As one of the world's largest apparel retailers, H&M is focused on improving its brand appeal and accelerating its response to evolving fashion trends, all while navigating intense competition from rivals like Inditex-owned Zara and online fast-fashion giant Shein.

Brazil is a key focus for this expansion. H&M inaugurated its first Brazilian store in August within an upscale mall in Sao Paulo. The company plans to open two additional stores by the end of November, with a further four projected for 2026, including a presence in Rio de Janeiro. Erver expressed optimism, stating, "In some of these markets that we haven't really penetrated... we see a bigger opportunity for growth, Brazil being one, Latin America in general being one, and India being another."

Simultaneously, H&M is exercising caution regarding consumer demand in the U.S. for the fourth quarter, as U.S. import tariffs have prompted some retailers to increase prices, leading to a decline in consumer confidence. This concern underscores the necessity of diversifying H&M's market footprint.

This strategic entry into Brazil and other emerging markets occurs amidst a significant reduction in H&M's global store presence. The company has been closing stores rapidly since the pandemic, with its global store count down 19% from its peak in late 2019, reaching 4,118 stores by the end of last month—its lowest figure since mid-2016. H&M intends to shut a total of 200 stores during 2025, primarily in more mature markets, a trend also seen with competitors like Zara, which reduced its store numbers to 5,528 by the end of July.

Beyond new market penetration, H&M is also enhancing its presence in established regions by opening flagship stores in prime tourist and shopping destinations, such as Paris' Le Marais and Shanghai's Huaihai Road. These premium locations aim to captivate style-conscious consumers and elevate the brand's image.

H&M's premium brand, Cos, which offers items like $149 dresses and $299 cashmere jumpers, is also set for an Indian debut. According to Erver, Cos will launch its first store in Delhi during the fourth quarter. Erver highlighted the potential for "affordable luxury positioning" in many emerging markets, identifying India as a "super interesting market" for Cos, and plans to visit India in the coming weeks.

The broader Latin American expansion is also gaining momentum, with H&M launching in Venezuela in the fourth quarter and planning an entry into Paraguay next year, following its opening in El Salvador earlier this month. Danske Bank analyst Daniel Schmidt noted the positive initial reception but cautioned that it remains "unclear how much this could affect sales growth next year," while acknowledging the encouraging signs.