Store closures have pummelled H&M into a deep loss in the second quarter.
The world’s second-biggest fashion retailer recorded a pretax deficit of $695 million, against a profit of around that much this time last year.
H&M says it had to increase price cuts, putting a squeeze on margins.
The Swedish firm also offered a bleak outlook for the coming period.
It expects a high level of discounting over the next three months.
Chief Executive Helena Helmersson says consumer demand remains week, with the whole industry also plagued by an oversupply of stock.
Now H&M will speed up store closures, and open fewer new ones, resulting in a net reduction of outlets.
Around 7% of its stores remain temporarily shut, against 80% at the height of the crisis.
It says trading in China is still below year-ago levels.
H&M shares sank 3% in early trade Friday (June 26).