(Yicai Global) June 28 -- Swedish fashion retailer H&M Hennes & Mauritz has closed a 15-year-old store in Shanghai, its first outlet in China's mainland, amid slowing sales.

The 3,000-square meter outlet, located close to China's first Zara, Uniqlo, and Adidas stores in downtown Shanghai, shut down recently, Beijing Business Today reported today.

The Covid-19 pandemic has affected how people shop, particularly in Shanghai which ended its two-month lockdown on June 1. "Bigger stores are more vulnerable," Time Finance reported yesterday, citing an insider in the retail sector.

"Operating costs such as rent, water and electricity charges, as well as employees' wages are too high, so stores with not enough consumers won’t last long. It is also true for H&M,” the insider added.

The Stockholm-based retailer began to close many stores in China in the second half of last year. Some 60 outlets were terminated as of December 2021, leaving 445 locations intact, according to the firm's earnings report. In Shanghai, the current number of stores is 26.

Sales have been unimpressive. Sales in Africa and the Asia-Pacific region, including China, dropped 3 percent in the first quarter of this year from a year ago. But global sales climbed 23 percent to SEK49.2 billion (USD4.9 billion).

In China, the company has had quality issues. The local operator, Hennes and Mauritz Shanghai Commercial, has received a total of 31 administrative penalties, public data show. The firm was punished at least eight times last year for selling poor-quality clothes.

There have been other problems. H&M was fined CNY270,000 (USD40,317) after advertising to have sold special-edition clothes in China last September, a claim that was found untrue.

Editors: Emmi Laine, Xiao Yi