H&M’s recovery continues as both CEO and chairman step down, says GlobalData

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Following today’s release of H&M FY figures for 2018/19, Kate Ormrod, lead retail analyst at GlobalData, a leading data and analytics company, comments: ‘‘Though H&M’s Q4 performance was bruised by the later timing of Black Friday in 2019 compared 2018, with the retailer stating that c.SEK500m of online sales shifted to December (and therefore FY2019/20) instead, the value player’s full year performance has been strong – especially its operating profit recovery in H2. Increased full-price sales and lower markdowns signal that H&M’s multi-pronged transformation plan, with its greater focus on online, supply chain, and the fine-tuning of its physical network, has been sound.

“Helena Helmersson, former COO, has assumed the position of CEO, the first woman to do so, with Karl-Johan Persson stepping down to take over as chairman later this year as Stefan Persson vacates the role. While there remains work to do in order to fully satisfy consumers’ demands, we expect H&M to continue to benefit from its vast future-proofing initiatives in 2020, with net sales over December and January rising by 5% in local currency, up from 4% last year, emphasising that its appeal and relevance have not wavered.

“Optimising its bricks-and-mortar business remains a priority with H&M planning to open a net of just 25 stores in FY2019/20, with physical expansion in growth markets such as South America and Eastern Europe almost offset by the closure of c.175 stores, primarily in Europe, the US and China. In contrast, the retailer opened a net 427 stores in FY2015/16, showcasing its significant shift in strategy and reining in of its estate owing to greater understanding of consumers and their desire to shop online, having been somewhat of a digital laggard previously.

“Pressure remains to elevate its remaining stores with a need to drive consistency in instore presentation and experience at its core H&M fascia. The retailer’s focus on sustainability is market-leading and apt given growing consumer interest, enabling H&M to deliver fast fashion with a conscience and at the same time casting shade on competitors such as Inditex. However it must continue to invest in areas such as value for money and quality that truly matter as purchase motivators among the majority of its shoppers in order to deliver results.”