Fashion giant H&M has said it plans to shut 250 of its stores globally next year after the pandemic moved more shoppers online.

The world’s second largest clothing retailer said that around a quarter of its 5,000 stores are able to renegotiate or exit contracts next year, allowing it to close some stores.

The update came as the Swedish company said it has seen trading continue to recover in September following the pandemic, although sales remained 5% lower than the same month last year.

It told shareholders that sales fell by 16% to 50.8 billion Swedish krona (£4.4 billion) for the quarter to August.

About 900 of its stores were closed to customers at the start of the period, due to lockdown restrictions.

It said this reduced to about 200 stores by the end of the quarter.

The retailer also reported that its pre-tax profits fell to 2.37 billion Swedish krona (£210 million) for the nine months to August 31, topping analyst expectations.

H&M said it has taken “rapid and decisive action” to manage the impact of the virus, addressing this with changes to purchasing, investments, rents, staffing and financing.

The company said it is stepping up its transformation plans with increased digital investment amid increased demand through its websites.

Helena Helmersson, chief executive of H&M, said: “Although the challenges are far from over, we believe that the worst is behind us and we are well placed to come out of the crisis stronger.

“Demand for good-value, sustainable products is expected to grow in the wake of the pandemic and our customer offering is well positioned for this.

“We are now accelerating our transformation work so that we continue to add value for our customers.”