LONDON (AP) — H&M’s top executive unexpectedly stepped down Wednesday and the company’s stock plunged as the fashion giant reported a drop in sales over the holiday shopping season.
Helena Helmersson resigned after four years as CEO and 26 years at the company, saying she was proud of the work done over the past few years, including navigating the COVID-19 pandemic, but that “it has been very demanding at times for me personally.”
She was replaced by Daniel Ervér, who was in charge of the H&M brand and has worked for the Swedish clothing retailer for 18 years.
“Our focus will be on offering our customers the best combination of fashion, quality, price and sustainability in an inspiring and attractive shopping environment,” Ervér said in a statement.
H&M shares fell as much as 11% after the announcement and news that its latest earnings missed analyst expectations. The announcement comes as the chain is facing increasing competition from Chinese low-cost fast fashion retailer Shein as well as other fashion giants like Zara.
Under Helmersson’s stewardship, H&M launched a restructuring plan in 2022 that included reducing its global workforce by around 1,500 positions with the goal of cutting costs and further improving efficiency. The goal set then was to achieve a 10% operating profit margin.
For the last three months of 2023, operating profit margin fell to 7.2% from 7.8% in the previous three months. The company says its “ambition” is still operating margin of 10% this year.
Sales also dropped 4% from Dec. 1 to Jan. 29 — a key holiday shopping period — compared with a year earlier.
“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,” said Louise Deglise-Favre, an apparel analyst at GlobalData in a note published Wednesday. “Luckily, her successor… already comes with a strong understanding of the group’s strategies, as he was previously head of the H&M brand, though he needs to act fast to win back shoppers.”
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