This year the company, founded in Stockholm in 1947, will be rejuvenated in two key positions – this is surprising given the history of the group. The 44-year-old Karl-Johan Persson, previously CEO, inherits his father at the top of the supervisory board. That is why Helena Helmersson comes into focus – the 47-year-old will be the company’s manager and face to the outside with immediate effect instead of Persson.
One expects new freshness from her – a factor that the father-son team no longer fully met due to economic turbulence. Stefan and Karl-Johan were considered to be a well-rehearsed team, as 72-year-old Stefan Persson had already taken over from his father, H&M founder Erling Persson – this happened in 1998 and is therefore over 20 years ago.
“Were too complacent”
When the then 33-year-old took the lead, there was no talk of a breath of fresh air. It was “not about big changes,” said Karl-Johan Persson at the time. H&M’s business model remains “the same as always”. An orientation with which long successes could be booked – but that should change drastically. Things went downhill especially in the second half of the 2010s.
Revenue and profit declined – H&M slipped while its main competitor, Zara parent Inditex, remained stable and threatened to rush. “We made mistakes,” Persson said in an interview with the German magazine “Stern” in March 2018. “We were probably too complacent and complacent.” Persson said it was “a wake-up call”. So several problems were homemade.
Several problem areas
For a long time, the development in online trading was overslept, and there was an urgent need for action at once. The problem was at least as big as that with the strengthening of the even cheaper competition – Primark and TK Maxx, for example. Persson also admitted errors here: goods should have been “better presented”, the “mix of offers” was no longer right, he said at the beginning of 2018.
The logical consequence was a slump in profits, weaker sales and a drop in prices. But the company managed the turnaround: In the third quarter of 2019, profits had increased for more than two years. The new figures presented on Thursday reflect the positive trend: For the fiscal year that runs from December 2018 to November 2019, profits increased by eleven percent to 17.4 billion crowns (1.63 billion euros).
“On the right way”
The group’s net sales, which also include other brands such as Arket, COS, Monki and Weekday, some of which belong to a higher price segment or are aimed at younger audiences in other cases, also increased by 11 percent year-on-year to almost 233 billion crowns (EUR 21.9 billion). “This positive notion shows that we are on the right track,” said Persson.
H&M was able to tackle the problems with a number of measures: For example, the group converted its logistics systems and expanded its online business. In 2017, almost 600 million euros were invested in this area. Almost half of all investments were covered. A new store concept was also developed to win back customers and lure them back into the shops.
Less focus on the family
It is all the more remarkable that the personnel change is now taking place. “If the numbers weren’t so good, you wouldn’t have dared to take the step,” Peter Malmqvist, chief analyst at the Swedish Association of Shareholders (Aktiespararna) told SVT. In particular, the new boss puts the analyst at the center of a new direction.
With the new boss Helmersson, it can succeed in reducing the company’s focus on the family, he said SVT. It should be seen as a “signal” that the clean-up work in the company (after the crisis) is over and the ground has been prepared for the new boss, the expert said. Persson, who took over as chairman of the board after the May board meeting, described Helmersson as an “experienced and good manager who lives our values”.
Questions left
As far as H&M’s strategy is concerned, the Perssons kept a low profile – the family is considered closed. Only when the issues of working conditions and sustainability came into focus did Karl-Johan Persson come out of cover. He had to defend himself against critics who denounced the working conditions of H&M seamstresses in Bangladesh and other low-wage countries.
Persson had to publicly comment several times on how H&M wants to improve the safety and precarious working conditions for textile workers in the clothing factories, how fashion could be produced fairly and how the group wants to become more sustainable. Topics that will continue to play a role in the future and will probably keep Helmersson busy as the company’s new boss.
It is an advantage that she knows the company well: After completing her university degree in Umea in northern Sweden, she has worked in the group since 1997 and has held various positions in the company since then. Among other things, she worked for several years as head of sustainability and was most recently head of the operative business. In 2014, she was named the most powerful business woman of the year by a Swedish magazine.
Employees spied on?
Most recently, H&M hit the headlines because of the suspicion that it had spied on employees in Germany and had also saved private data on diseases and family backgrounds. The corporation therefore faces a high penalty. A corresponding fine procedure had been initiated because the suspicion had been substantiated. The location in Nuremberg is said to be affected.
A H&M spokeswoman said in writing: “We continue to take the incident very seriously and sincerely regret that our colleagues are affected.” They fully cooperate with the data protection authority, have taken a number of measures and are in close dialogue with everyone Colleagues. “The protection of our colleagues’ personal data is our top priority,” was assured.
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