The fast-fashion retailer is currently under investigation by the Fair Work Ombudsman and has already started reimbursing some workers. In addition to grappling with financial challenges, the company is now facing legal uncertainty.
When H&M entered the Australian market in 2014, it was part of a global retail wave that drew strong local interest. Thousands of shoppers queued outside its Melbourne flagship store within days of its launch, leading to rapid expansion to nearly 50 stores nationwide. A decade later, however, the business operates just 34 outlets as it struggles with declining revenue, increased rivalry and a weakening economy.
For the 12 months ending November 2024, H&M Australia reported $340 million in sales, down from $354.55 million the previous year. Though it returned to a modest profit of $1.82 million after a previous loss, this result is significantly below earlier profits achieved with only a handful of stores. The company attributed its weaker performance to reduced consumer spending driven by rising interest rates and cost-of-living pressures, which remain a challenge for the wider retail sector.
H&M is not alone in facing wage-related issues and regulatory scrutiny. Other major players in Australian retail, including large supermarket and sporting goods chains, have recently revealed wage repayments ranging from $50 million to more than $450 million. Budget fashion, traditionally H&M's strong suit, has become increasingly competitive as chains such as Kmart and Target improve their offerings. These two rivals have seen combined revenue grow from $7.7 billion in 2014 to over $11.4 billion today.
With fewer stores, lower revenue, increased compliance expenses and greater competition, H&M’s prospects in Australia appear uncertain. Although the brand remains active, its footprint continues to shrink, with recent store closures in New South Wales and a scale-back of its COS brand in three states. The Fair Work investigation may cover up to nine years of employee records, adding further complications to the company’s recovery.
