H&M continues to be off the pace in the fast-fashion race

Robyn Duffy, senior analyst at RSM UK on today’s trading results from H&M: ‘H&M is off the pace in the fast-fashion race with today’s decrease in sales underlining a turbulent period for the retailer. These results follow flat Q4 sales and the shock exit of CEO Helena Helmersson in January. In the current economic climate, the business has struggled to stay competitive against burgeoning counterparts including Inditex - owner of Zara, and fast-fashion giant Shein. 

‘It’s a common theme we’re seeing across retailers. Brands that left store rationalisation and investment in logistics late have struggled to keep control of margins. Those who were quicker off the mark to invest early in the downturn are now entering the easing economic landscape in stronger shape. As we come to the end of the inflationary period and cost of living pressures begin to ease, brands like H&M are struggling to compete and find themselves chasing their tail strategically.   

‘With new CEO Daniel Ervér focused on profitability and improving margin, we’ve seen gains in these areas which should go some way to reassuring investors. With aims of reaching a 10 per cent operating margin by the end of the year, this should allow the business to invest in better quality product at a better price, and give H&M a more competitive edge against its rivals. H&M will be one to watch for the rest of the year in terms of whether this new strategy will pay off.’