H&M CEO Abruptly Quits, Shares Drop 8% Amid Slump In Sales And Profitability

H&M HNNMY CEO Helena Helmersson has resigned with immediate effect. The company’s veteran, Daniel Ervér, has taken over. The sudden change in leadership comes as the Swedish fashion retailer grapples with declining sales and profitability.

What Happened: On Wednesday, Helmersson unexpectedly stepped down, citing the demanding nature of her role and her lack of energy to continue, reported Reuters. This announcement resulted in a disappointing 8% drop in the company’s shares.

The company’s sales for December and January also saw a 4% decrease compared to the previous year, a concerning trend for the crucial Christmas shopping period. H&M, the world’s second-largest listed fashion retailer, has been struggling to compete with the likes of Zara and Shein, both of which have experienced robust sales growth.

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Adil Shah, a portfolio manager at Storebrand in Oslo, which holds H&M shares, noted that the market might view the leadership change favorably, especially with the speculation that the margin targets may not be met.

Despite the recent challenges, H&M has been focusing on profitability over sales volumes, aiming for a 10% operating margin this year. Daniel Ervér, who has been with H&M for 18 years, will continue to oversee the retailer’s core H&M brand alongside his new role as CEO.

Why It Matters: H&M’s leadership change comes after a series of strategic moves and challenges. In October, the company expanded its online presence in India by partnering with Reliance Retail’s Ajio, potentially indicating a shift from its exclusive online alliance with Myntra.

In March, H&M faced worse-than-expected Q1 sales, reflecting the cutthroat competition in the fashion retail industry. The company also launched a resale program in partnership with ThredUp to promote sustainability and circular fashion.

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