H&M targets Brazil, India, as weak Europe demand and US tariffs pressure sales

Fashion retailer H&M is increasing its drive into emerging nations as consumer spending in Europe slows and tariffs impact demand in the United States, its second-largest market.

Chief Executive Daniel Erver stated on Thursday that the Swedish business sees enormous prospects in markets where it has a limited presence, including Brazil, Latin America as a whole, and India.

The initiative is Erver's latest attempt to improve performance at one of the world's top garment stores.

He is working on increasing profitability by strengthening the company's brand appeal and speeding up its response to fashion trends, while also dealing with increased competition from Inditex-owned Zara (ITX.MC) and fast-rising online player Shein.

Brazil expansion marks Latin America push

H&M established its first store in Brazil in August, situated in an affluent mall in São Paulo.

The company intends to open two further stores by the end of November, followed by four more in 2026, including one in Rio de Janeiro.

“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,” Erver told Reuters.

The timing of the expansion is consistent with a more cautious prognosis for the United States.

Erver is concerned about consumer demand in the fourth quarter, noting that import taxes have forced some merchants to hike prices at a time when consumer confidence in the United States is eroding.

Store closures continue elsewhere

This redirection towards new frontiers is taking place amid an ever-shrinking global footprint.

H&M’s global store count has fallen 19% from its 2019 peak, standing at 4,118 locations at the end of last month—the lowest since mid-2016.

The retailer plans to close around 200 stores during 2025, mainly in mature markets.

Zara-owner Inditex has also scaled back its footprint, with total store numbers dropping to 5,528 as of the end of July.

Inditex, Zara's rival, has also scaled back, trimming its number of outlets to 5,528 at the end of July.

H&M has opened massive flagship stores in the most high-profile tourist and shopping districts, even as it consolidates in other areas.

Recent openings include Le Marais in Paris and Huaihai Road in Shanghai, both of which aim to strengthen their positioning among fashionable consumers in high-traffic areas.

Premium brand launch in India

Along with the Brazil effort, H&M plans to offer its luxury brand Cos to India.

The company, which sells $149 dresses and $299 cashmere sweaters, will make its debut in Delhi during the fourth quarter.

"You see in many of the emerging markets that there are great opportunities for affordable luxury positioning, and India is one super interesting market to explore for Cos," Erver said, adding that he intends to visit the country soon.

H&M is also expanding its footprint further throughout Latin America.

The company, which opened a store in El Salvador earlier this month, will enter Venezuela in the fourth quarter and Paraguay next year.