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H&M CEO Steps Down After Fashion Group Rivals Take the Lead
February 1, 2024
The H&M CEO role has undergone a change of leadership. The reins of the Swedish fashion giant are now handed over to Daniel Ervér, a seasoned insider, taking over from Helena Helmersson. This change comes as H&M grapples with underperformance, trailing behind competitors like Inditex and SHEIN.
The announcement dealt a blow to H&M’s stock price, which plummeted by a significant 12%. December and January sales also fell by 4% year-over-year, souring the crucial Christmas shopping season.
Helena Helmersson, after leading the company for four years, decided to step down, citing the demanding nature of the role. She admitted to lacking the energy required to continue effectively in the position.
The newly crowned CEO Ervér, age 42, is a seasoned H&M veteran, having been with the company for 18 years. Alongside his new role, he will maintain his position as the head of H&M’s core brand. Prior to his appointment, Ervér had expressed an interest in the CEO role, with the board approving his appointment on Wednesday.
Ranked as the world’s second-largest fashion retailer after Inditex, H&M has been struggling with competition from Zara and SHEIN. These brands have managed to maintain stronger sales growth, leaving H&M behind.
As part of its strategy, H&M has been prioritizing profitability over sales volumes. The company aims to achieve a 10% operating margin this year through cost-cutting measures, including store closures and staff layoffs. Ervér confirmed this new focus and emphasized the company’s efforts to reach its profitability target.
However, the fourth quarter didn’t show promising results, with H&M’s operating profit margin dropping to 7.2% from 7.8% in the previous quarter. Moreover, sales in the company’s fiscal first quarter shrank by 4%. This dip was in stark contrast with the previous year’s 5% sales growth during the same period.
Compared to Inditex’s impressive 20.3% operating margin, H&M seems to be in a tough spot. Furthermore, H&M’s fourth-quarter operating profit rose to 4.33 billion crowns ($415.4 million), falling short of analysts’ expectations of 4.57 billion crowns.
The company’s chairman, Karl-Johan Persson, however, expressed hope for the future, stressing that H&M is in a strong position and is poised for further improvements this year. Despite current struggles, the stock has seen a rise of about 29% over the last 12 months.
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