H&M appoints new CEO after another disappointing year

H&M CEO Helena Helmersson has given up after another disappointing year, even though net profit doubled and sales grew. She hands over to Daniel Ervér, now the CEO of the eponymous brand.

Better margins

Last year, H&M group sales grew 6 % – which would have been + 8 % excluding Russia and Belarus. Gross profit margins also rose, and net profit doubled to 8.7 billion Swedish krona (770 million euros).

Still, results remain below expectations. Spanish rival Inditex has been doing better for years, while the rise in net profit is partly explained by the restructuring costs that still weighed heavily on profits in 2022. During that restructuring, 1,500 employees lost their jobs. This week, the group announced another major reorganisation in Spain where almost a quarter of stores will close.

Sales down

The year did not end on a high note either: operating profit rose in the fourth quarter, but still fell short of forecasts, while the profit margin fell compared to the third quarter. In the period between 1 December and 29 January, sales actually fell by 4 %, compared to a 5 % increase a year earlier.

Board chairman Karl Johan Persson thanks Helmersson for improving profitability, but also announces a surprising change: Daniel Ervér, currently the head of the H&M brand, will now lead the entire group. Ervér promises to focus further on profitability (rather than price cuts) and aims for a 10 % operating margin this year. The group will thus have to distinguish itself from low-cost fashion retailers such as Shein and Primark.