H&M to shut a fifth of Spanish stores, lay off 588 workers

(In headline and first paragraph, corrects proportion of stores from a quarter to a fifth; in third paragraph, corrects number of stores from 91 to 133 and changes attribution from the annual report to the company)

MADRID (Reuters) - Swedish fashion retailer H&M announced on Friday a plan to close down more than a fifth of its stores and lay off as many as 588 workers in Spain, home of its bigger rival, Zara owner Inditex, local unions said.

The company will carry out the layoffs for unspecified organizational, productive and economic reasons, unions CCOO and UGT said in a joint statement.

The company said it has 133 stores in Spain and employs almost 4,000 people there, according to H&M's annual report. The retailer confirmed in a statement sent to Reuters it intends to close 28 stores.

H&M said that having stores at the right locations and staying competitive was a priority, and that it was "consistently" evaluating its store portfolio.

"This involves ... enhancing the shopping experience in our existing stores, actively seeking out new opportunities and making informed decisions about closing stores when necessary," it said, without providing further details on why it decided to close the stores.

The move is in keeping with other big fashion retailers around the world that have closed smaller stores in recent years while expanding flagship branches that draw more traffic and can double as e-commerce logistics centres.

H&M in Spain has also faced problems with absenteeism and workers complaining of work overload, according to union sources.

In November 2022, H&M announced a global plan to cut 1,500 jobs to trim costs. In Spain, it had already reduced its payroll by 400 people in 2021.

"We believe the measure is too aggressive and it is possible to look for solutions which don't imply job losses," the unions said.

Negotiations with the unions in Spain are due to start in September. H&M said it had already informed the union and that it would work closely with it.

Angeles Rodriguez, a CCOO leader, said the unions were surprised by the announcement of layoffs.

"The company never showed any weird behaviour and was complying with a pay raise agreed last year," she said. H&M granted significant pay increases last year after workers protested and went on strike.

H&M is the world's second-largest listed clothing retailer behind Inditex and is a fixture in malls and high streets the world over.

(This story corrects the proportion of stores from a quarter to a fifth in the headline and first paragraph and corrects the number of stores from 91 to 133 and changes attribution from the annual report to the company in the third paragraph.)

(Reporting by Inti Landauro, Corina Pons and Pietro Lombardi in Madrid; Editing by Aislinn Laing, Andrei Khalip and Matthew Lewis)