H&M eyes expansion in Vietnam’s wealthiest city

Fashion retail giant H&M is looking into procedures for leasing locations and opening new stores at the heart of Ho Chi Minh City, as it aims for expansion in Vietnam.

Plan to have 20 stores in Vietnam

At a Thursday meeting with Nguyen Van Dung, Vice Chairman of the municipal People’s Committee, Saed El-Achkar, regional manager and CEO of H&M Greater China & East Asia Regions, expressed a strong interest in exploring the potential to expand H&M’s retail chain in HCMC.

He said the retailer wants to better understand procedures for renting premises and opening new stores at the city center.

H&M, headquartered in Stockholm, Sweden, is one of the world’s leading fashion retail groups. Founded in 1947, the company now operates in over 75 countries and territories with more than 4,000 stores globally.

The group entered the Vietnamese market in 2017 and currently operates 14 stores nationwide. It has also been sourcing from Vietnam for nearly two decades, working with 103 partner factories that collectively employ 86,875 workers.

In June, at a meeting with Vietnamese Prime Minister Pham Minh Chinh during his official visit to Sweden, H&M’s CFO Adam Karlsson stated that the group plans to increase its store count in Vietnam to over 20 in the coming years.

However, this number still lags behind other Southeast Asian markets where H&M operates, such as Thailand with 33 stores, Malaysia with 45, and the Philippines with 42.

Globally, H&M had 4,369 stores as of the end of last year, according to data from Statista. The United States remains its largest market with 509 stores, followed by Germany with 407, and the United Kingdom with 228.

The group also aims to build major textile recycling hubs in strategic locations worldwide, including Vietnam. Previously, H&M received an investment license from authorities of the former Binh Dinh province (now part of Gia Lai province) to develop a high-tech polyester fabric recycling plant. The project involves a nearly $1 billion investment and will have a designed capacity of 250,000 tons per year.

The plant is expected to commence operations by the end of 2028, with the goal of making Vietnam the world’s first global center for circular, high-tech textile manufacturing, meeting U.S. and EU standards.

Earnings in Vietnam

H&M reported revenue of VND227 billion ($8.6 million) in its first year in Vietnam (2017), with a gross profit of VND152 billion, translating to a high gross margin of 67%. However, its after-tax profit was only VND10 billion ($378,752), indicating that selling and administrative expenses were substantial.

In 2018, revenue tripled to VND763 billion ($28.9 million), and in 2019, it surpassed VND1.1 trillion. Nevertheless, net profits remained modest - VND11 billion in 2018 and VND57 billion ($2.16 million) in 2019.

In 2022, H&M’s revenue in Vietnam rose to nearly VND1.4 trillion ($53 million), marking a 66.7% increase from the previous year. Its after-tax profit reached over VND118 billion ($4.47 million), up VND46 billion from 2021.