PARIS – H&M Group is shaking up its top management after successive quarters of flat sales.
In a statement issued Wednesday, the Swedish fast fashion behemoth announced chief executive officer Helena Helmersson will step down.
Daniel Ervér will succeed her as president and CEO, effective immediately.
Helmersson had been with the company since 1997 and in the CEO role since 2020. Ervér has been working in the group since 2006, most recently as head of H&M. He will continue in that role as well, and take on dual duties of the H&M flagship brand and the group.
“The board of directors would like to express a big thank you to Helena for her valuable contributions during a very intense time. Helena is an appreciated leader that has decisively and effectively led and navigated the H&M group through a time largely marked by pandemic, geopolitical and macro-economic challenges. During this time, we have gradually taken clear steps towards our long-term goals. The H&M group is in a strong position, with a positive profitability trend and good conditions to make further improvements in 2024,” said H&M Group chair Karl-Johan Persson.
“Daniel is a competent, experienced and respected leader and has the qualities needed to continue to develop the H&M group,” he added.
“I am both honored and very happy for the board’s confidence and motivated and humbled by the task. Together with all committed colleagues, we will continue to create unbeatable value for our customers and profitable growth. Our focus will be on offering our customers the best combination of fashion, quality, price and sustainability in an inspiring and attractive shopping environment,” said Ervér.
The announcement comes as H&M Group’s sales were down 1 percent in local currencies in the fourth quarter, following two successive quarters of flat sales.
Sales over the busy holiday period did not boost its bottom line. In the period from Dec. 1 to Jan. 29, sales were down 4 percent in local currencies compared to the same period last year.
Sales in the three months from Sept. 1 to Nov. 30 totaled 62.65 billion Swedish kronor, or 5.55 billion euros at current exchange. That marked a 3 percent increase in Swedish kronor, compared to the same period last year.
The group, which has been intensifying its cost cutting measures, reduced its stock by 13 percent.
While cutting costs, the company has increasingly focused on improving its operating margin, with a goal of 10 percent by the end of 2024. It moved closer to that goal, with an operating margin of 6.9 percent in the fourth quarter.
Looking at the full year results, sale were up 1 percent in local currencies to 236.03 billion Swedish kronor, or 20.92 billion euros. That marks an 6 percent increase in Swedish kronor. The currency lost seven percent of its value against the euro in 2023.
H&M Group, which also operates Arket, Cheap Monday, COS, Monki, Weekday, & Other Stories and H&M Home, indicated that its portfolio brands were performing better than its flagship H&M label, noting that sales at other brands had increased by 9 percent in local currencies over the course of 2023.
“Our top priority is H&M, where our focus is on further enhancing the customer experience and the customer offering,” the company said in a statement. It is investing in AI and tech to “work on greater precision and shorter response times,” as well as omnichannel integration.
“H&M is very much in ‘trading sales for profits’ mode which is leading to margin improvement but some pressure on volumes. As such we think it may have to reinvest sourcing gains at some point to drive volume as it appears to be losing some [like-for-like] share in major markets,” said RBC analyst Richard Chamberlain in a note following the release.
The group has the “challenge of capturing more midmarket fashion spend without compromising the value for money perception of the H&M brand,” he added.
This comes just days after news the company plans to close 28 stores, or one-fifth of its stores, in Spain and lay off nearly 590 workers.
“This involves securing the best locations that resonate with our customers, enhancing the shopping experience in our existing stores, actively seeking out new opportunities,” the company said in a statement confirming the closures.
In December, the company announced it will be opening a new concept store in London, which will be experiential and focused on “fashion forward products with elevating styling.”