H&M has announced its CEO Helena Helmersson has left the business after 26 years with Daniel Ervér who was previously responsible for the H&M brand taking over as president and CEO.
Exiting H&M CEO Helmersson admitted in a statement that the role "has been very demanding at times" for her personally and she "now feels that it is time to leave the CEO role, which of course has not been an easy decision".
The announcement follows a mixed set of results with the retailer reporting a 4% decline in local currencies between 1 December 2023 and 29 January 2024 compared with the same period in the previous year.
However, its FY23 results for the period 1 December 2022 to 30 November 2023 saw a 6% net sales increase to SEK236.035bn ($22.69bn) from SEK223.553bn. Excluding Russia and Belarus the increase was 8% in SEK and 1% in local currencies.
In the fourth quarter (1 September 2023 to 30 November 2023) the H&M group’s net sales amounted to SEK62,650m compared to SEK62,433 in the same period last year. Excluding Russia and Belarus the increase was 3% in SEK and decreased by 1% in local currencies.
In terms of the FY results, Helmersson believes the H&M group’s brands are well positioned for continued growth, with the company making progress in all growth areas.
She said: "For many consumers the year was marked by lower purchasing power because of high inflation and high interest rates. Despite this, our net sales in comparable markets increased in relation to 2022. The fourth quarter started with unusually hot weather in several of our important European markets. From mid-October sales recovered as more normal autumn weather returned, with well-received collections."
'Lacklustre FY and disappointing Q4'
GlobalData apparel analyst Louise Deglise-Favre described the FY results as "lacklustre". She explained: "Q4 was particularly disappointing, with sales declining 0.3%—a steep drop compared to the 6.0% increase in Q3. While the unconventionally hot weather at the beginning of the quarter was partially to blame, H&M struggled to convince consumers to spend during tough economic times due to its core brand’s uninspiring ranges."
Deglise-Favre added that H&M Group's portfolio brands are driving growth, while its flagship H&M has not performed as well. She said: "COS and Arket’s minimalist Scandi aesthetic and premium positioning resonated well with consumers as they sought out better quality garments and higher value for money, while Weekday likely benefitted from new denim trends as preferences shifted towards more relaxed styles. Arket also focused on European store expansion, opening stores in Estonia, Switzerland and Latvia, with plans to open another three in Spain, Italy and Poland in 2024.
"In contrast, H&M’s core brand remains unable to grasp the attention of young shoppers that are increasingly favouring more trend-led competitors like Zara and Shein."
H&M FY financial highlights
- Net sales for financial year 1 December 2022 – 30 November 2023 in SEK increased 6% to SEK236,035bn ($22.69bn) from SEK223.553bn in the same period the year before. Excluding Russia and Belarus the increase was 8% in SEK and 1% in local currencies.
- Operating profit including allocation to the H&M Incentive programme (HIP) increased to SEK14.5bn from SEK7.2bn, corresponding to an operating margin of 6.2%. Operating profit amounted to SEK14.7bn from SEK7.2bn excluding allocation to HIP. This corresponds to an operating margin of 6.2%.
- The group's profit after tax was SEK8.7bn.
H&M Q4 financial highlights
- Net sales amounted to SEK62.7bn from SEK62.4bn in the same period last year. Excluding Russia and Belarus the increase was 3% in SEK and decreased by 1% in local currencies.
- Operating profit amounted to SEK4.5m from SEK0.8m, excluding allocation to HIP. This corresponds to an operating margin of 7.2%.
- The result after tax increased to SEK1.58bn from -SEK864m, corresponding to SEK0.97 (-0.53) per share.
Exiting H&M group CEO comments on latest sales results
H&M group's top priority remains its flagship brand H&M with the focus on further enhancing the customer experience and the customer offering.
Helmersson said: "Our customers are gaining access to a broader and more relevant assortment in stores and online thanks to our investments in areas such as tech and AI, which support our continued work on greater precision and shorter response times. Simultaneously we are continuing to integrate the two channels for a convenient customer experience with better product availability. In 2024 we are stepping up the pace of investment in our existing stores to provide an even more inspiring experience, while at the same time securing our store portfolio for continued profitability and growth.
The retailer added that its portfolio brands COS, Monki, Weekday, & Other Stories and Arket continue to develop well. Sales at COS, Arket and Weekday are reported to have developed particularly strongly over the year, and these brands are said to be contributing more and more to the group’s profitability development.
The company is continuing to create new revenue streams through a variety of strategic partnerships and new circular business models, and sees great potential in the companies that it invests in.
Helmersson added: "One example is Sellpy, which is growing rapidly in 24 European markets as demand for second-hand fashion continues to increase. Our investments in innovation also mean we are taking important steps on our journey towards circularity. Through greater use of recycled and more sustainably produced materials we are moving closer to our long-term sustainability goals."
She concluded: "The H&M group stands strong with a robust financial position, strong cash flow and improved profitability. With our continued customer focus, committed colleagues and faster pace of investment we see good conditions for continued profitable and sustainable growth in 2024.
