H&M faces a $35m unpaid wages bill as Australian profits prove elusive
When H&M opened its first store in Australia more than 15,000 people lined up. Now, the Swedish fashion giant is facing sliding sales and a provision as high as $35m for underpayments.
Swedish retail giant H&M is struggling to revive its fortunes from when it first landed in Australia to queues of shoppers and bumper profits.
Its financial woes now include being the subject of a Fair Work Ombudsman investigation amid allegations as many as 1,500 of its Australian staff were underpaid, incurring a $35m provision.
Sweden-based H&M joins other retailers footing the bill for lost wages, including Woolworths’ estimated $450m obligation, Coles at $50m and Super Retail Group, owner of Rebel, Supercheap and BCF, owing more than $50m.
At its peak H&M had almost 50 stores across the country but has slimmed down to 34.
H&M Australia’s sales slid to $340m for the 12 months to November 2024 from $354.55m, according to its corporate filings. It swung back to a small profit of $1.82m against a loss of $3.565m. But this meagre return is still smaller than its maiden profit in 2015 when it only had a handful of stores.
It predictably blamed the Australian economy for its weaker performance in financial year 2024. “The company’s revenue and financial results have been negatively impacted by shifting consumer spending because of rising interest rates resulting in higher cost of living for our customers,” the directors said in the report.
H&M arrived with high hopes, which paid off almost immediately as it opened in Melbourne’s Bourke Street mall. The fashion and homewares chain drew 15,000 people to its grand opening, and quickly expanded as Australia became one of the fastest growing regions among the more than 60 countries it trades in.
At the time it was at the vanguard of other globally successful retailers to push into Australia which included Spanish powerhouse Zara, Japan’s Uniqlo and French cosmetics group Sephora. H&M and others began quickly stripping sales from established retailers such as department stores Myer and David Jones. But now, the foreign chains are finding profits much harder to realise as homegrown retailers fight back.
Affordable, on-trend fashion – which is the core of H&M’s offer - has also become a crowded market since 2014 with department stores such as Kmart and Target greatly sharpening their fashion range. When the first H&M store opened in Australia, Kmart and Target had combined sales of $7.7bn; today the Wesfarmers-owned stores command annual revenue of more than $11.4bn.
H&M is steadily slimming its store footprint in Australia, including the Westfield Bondi Junction store in 2021 after a rental dispute with landlord Scentre Group. In 2024 it closed a H&M store in Kotara NSW, as well as its related retail brand COS in Brisbane, Canberra and Perth.
The Fair Work Ombudsman investigation over possible underpayments could stretch back nine years.
“The company has engaged a third-party specialist to undertake a review of monetary entitlements of store based employees. Based upon the review of a sample of employees an estimate of the underpayment of employee entitlements including salary related payments and oncosts was calculated by the specialists, and this calculation and estimation process is ongoing as at the date of this report,” the H&M Australia accounts disclosed.
It recognised a cumulative provision of $34.9m.
According to its 2024 accounts, H&M Australia spent $82.9m on employee wages and related staff expenses.
H&M made the first tranche of payments in relation to the underpayment of employees in July and is currently working on the next phase of payments, the company said.
A spokeswoman for H&M Australia was unavailable for comment.
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