H&M’s CEO abruptly quit on Wednesday and company veteran Daniel Ervér took over with immediate effect, as the Swedish fashion retailer struggles to improve sales and profitability.
Shares in the Swedish fashion retailer fell 8% when outgoing CEO Helena Helmersson said she had decided to leave the company after four years in the top job, adding the role was “very demanding” and told reporters she did not have the energy to continue.
The leadership change comes as H&M said sales for December and January were down 4% from a year earlier, a bad sign for the crucial Christmas shopping period.
The world’s second-largest listed fashion retailer after Inditex, opens a new tab, H&M has struggled to compete with Zara and off-price fast-fashion giant Shein, both of which have seen strong sales growth.
“I think the market will welcome the change after digesting the numbers,” said Adil Shah, portfolio manager at Storebrand in Oslo, which holds H&M shares.
H&M CEO Helena Helmersson unexpectedly quit the company after four years, claiming the role was “very demanding.” TT/AFP NEWS AGENCY via Getty Images
“Speculation that margin targets will not be met is one of the stated reasons for the CEO change,” he added.
H&M has focused on profitability over sales volume recently as it aims to achieve a 10% operating margin this year.
Ervér, 42, has been at H&M for 18 years, most recently as head of the retailer’s H&M core brand, a role he will hold alongside his CEO duties.
Daniel Erver has taken over following the CEO’s departure as shares in the Swedish fashion retailer fell by 8%. via REUTERS
“We think there is a lot that needs to be done or can be done to restore this business, and the question is whether someone who has been there for 18 years is the right person, or even has the mandate to take those steps. ,” said Bernstein analyst William Woods.
H&M’s fourth quarter operating profit margin fell to 7.2% from 7.8% in the third quarter.
Having previously said its goal was 10%, the company on Wednesday called it “ambitious.”
H&M is struggling to compete with rivals Zara and low-priced fast-fashion giant Shein. AFP via Getty Images
Measured in local currency, sales from Dec. 1 to Jan. 29 – the start of its fiscal first quarter – fell 4%, compared to a 5% increase in the same period last year. Sales in the fourth quarter have also fallen 4%, more than market expectations.
Fourth-quarter operating profit was $415.4 million, up from $821 million a year earlier but below the $4.57 billion expected by analysts in an LSEG survey.
JPMorgan analysts said the results were disappointing, and that H&M’s weak fourth-quarter profit “slightly reduced the credibility” of its 10% margin target.
Karl-Johan Persson, chairman of H&M and grandson of founder Erling Persson, said the company was in a strong position with “good conditions to make further improvements” this year.
“Shares were down 8% at 154 Swedish krone (14.79 USD) by 0840 GMT after rising about 29% over the past 12 months.”
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Source: thtrangdai.edu.vn/en/
