H&M has reported the biggest drop in quarterly sales in at least a decade.

Fewer customers are visiting its flagship locations, leading the company to pare expansion plans and consider closures. The stock fell as much as 16 per cent, the steepest intraday decline since March 2001.

Sales excluding value-added tax fell four per cent in the three months through November. Sales have declined in only three quarters in the past ten years.

Almost 15 per cent of H&M’s free float -- the shares that are readily available to trade -- has been shorted. In a short sale, investors borrow shares and sell them in the hope that they decline, allowing them to repurchase them more cheaply and pocket the price difference as profit.

H&M’s supply chain lacks reactivity, which is one of the group’s structural issues in front of abrupt changes in fashion. The company aims to accelerate a transformation plan to better integrate physical and digital stores.

H&M had planned a net addition of 385 stores this year, which includes 90 closures. The company had also aimed at having online sales in 43 markets by year-end.

A crisis that’s shuttered shopping malls in the US is spreading to other parts of the world, hitting H&M’s earnings and forcing the retailer to cut prices to clear out inventory.