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H&M on Wednesday replaced Helena Helmarsson as CEO and replaced company veteran Daniel Elber as CEO as the Swedish fashion retailer’s performance lagged behind rivals such as Inditex and Shein. He made an unexpected announcement.
H&M’s shares fell 12% as the company revealed sales fell 4% in December and January compared to a year earlier, a bad sign for the crucial Christmas shopping period.
H&M CEO Helena Helmarsson presents the company’s financial report during a press conference at H&M’s headquarters in Stockholm, Sweden, January 27, 2023. (TT News Agency/Christine Olsson, via REUTERS/Reuters Photo)
Helmerson, who resigned after four years as CEO, said the role was “very demanding” and he had no desire to continue.‘
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Mr Herbert, 42, has been with H&M for 18 years, most recently as head of the retailer’s core H&M brand, and will continue in that role alongside his CEO role. The Swede said in an interview with Reuters that he had expressed his interest in the role in December and that the board made the decision on Wednesday morning.
Daniel Arbor, who replaced Helena Helmarsson as CEO of Swedish clothing giant Hennes & Mauritz, will give a lecture in Stockholm, Sweden on January 31, 2024. (TT News Agency/Samuel Steen via REUTERS/Reuters Photo)
Struggling to improve sales and profitability
H&M, the world’s second-largest publicly traded fashion retailer after Inditex, is struggling to compete with Zara, which has seen strong sales growth, and online low-cost fast fashion giant Shine.
“I think the market will welcome this change once it digests the numbers,” said Adil Shah, portfolio manager at Storebrands in Oslo, which owns H&M shares.
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H&M is aiming to achieve a 10% operating profit margin this year and has recently focused more on profitability than sales as it cuts costs by closing stores and laying off employees.
“We will maintain our 10% profitability target. We will work hard to achieve that goal,” Arbor told Reuters.
H&M’s operating margin fell to 7.2% in the fourth quarter from 7.8% in the third quarter.
New York, USA, September 16, 2023: The H&M logo photographed in Manhattan. (Michael Kapeler/Photo Alliance via Getty Images/Getty Images)
Sales, measured in local currency, from Dec. 1 to Jan. 29, the start of the first quarter of the fiscal year, fell 4% compared to a 5% increase in the same period last year. Sales in the fourth quarter also fell 4%, higher than market expectations.
Inditex’s operating profit margin for the nine months ended October was 20.3%. Sales for the same period increased by 11.1%.
H&M’s fourth-quarter operating profit was 4.33 billion kronor ($415.4 million), up from 821 million kronor in the same period a year earlier, compared with the 4.57 billion that analysts in an LSEG survey had expected. It fell below the krona.
JPMorgan analysts said the results were disappointing and that H&M’s weak fourth-quarter profit slightly undermined the credibility of its 10% margin target.
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Karl-Johan Persson, chairman of H&M and grandson of founder Erling Persson, said the company was in a strong position with “good conditions for further improvement” this year. The Persson family owns 51% of H&M.
The stock was down 12% by 4:45 p.m. Japan time, having risen about 29% in the past 12 months.
