Daniel Ervér Will Succeed Helena Helmersson in a Strategic Response to Consecutive Quarters of Disappointing Sales
H&M Group is undergoing a major leadership shift in response to consecutive quarters of stagnant sales. In an official statement released on Wednesday, the prominent Swedish fast-fashion giant disclosed that Chief Executive Officer Helena Helmersson will step down from her position.
With immediate effect, Daniel Ervér will assume the role of President and CEO, marking a surprise move that rattled investors. This abrupt announcement led to a 9.7 percent decline in share prices during mid-morning trading.
Helmersson, who joined the company in 1997 and took on the CEO role in 2020, received appreciation from H&M Group Chair Karl-Johan Persson. He acknowledged her significant contributions, steering the group through challenging times such as the pandemic and the Russian invasion of Ukraine, which prompted the closure of stores in Russia—a market worth approximately $200 million in revenue.
Expressing confidence in Ervér, Persson stated, “Daniel is a competent, experienced, and respected leader and has the qualities needed to continue to develop the H&M group.”
Speaking to the appointment, Ervér said, “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.”
This leadership change coincides with H&M Group reporting a 1 percent decline in sales in local currencies for the fourth quarter, following two consecutive quarters of flat sales. The holiday period failed to bolster the company’s bottom line, with a 4 percent decrease in sales in local currencies from December 1st to January 29th compared to the same period the previous year.
The company, actively pursuing cost-cutting measures, aimed at achieving a 10 percent operating margin by the end of 2024. The fourth quarter saw a positive step towards this goal, with an operating margin of 6.9 percent.
H&M Group, which encompasses brands Arket, Cheap Monday, Cos, Monki, Weekday, & Other Stories, and H&M Home, reported that its portfolio brands outperformed the flagship H&M label. Sales at other brands increased by 9 percent in local currencies throughout 2023.
Acknowledging the challenges, particularly in capturing mid-market fashion spend without compromising the value for money perception of the H&M brand, the company is strategically investing in AI and technology for enhanced customer experience and omnichannel integration. Analysts observe that H&M is currently prioritizing profit over volume, leading to margin improvement and increased pressure on sales volumes.
