Shares of Swedish retailer H&M were down more than 13% at 2 p.m. London time on Wednesday, after the company announced weaker sales and the surprise departure of its chief executive.
H&M sales were 1% lower for the full financial year in local currencies, and 4% lower year on year in December 2023 and January 2024.
The company has struggled to maintain sales growth in recent years amid increasing competition, both from rivals such as Inditex-owned Zara and from online fast-fashion stores.
On Wednesday, H&M reiterated previous messaging that it is focusing on cost control and profitability.
Operating profit in the full year ending Nov. 30, 2023, more than doubled, coming in at 14.5 billion Swedish krona, or $1.4 billion, up from 7.17 billion krona the year before. But H&M’s fourth-quarter operating profit margin slid, coming in below market expectations.
European retailer stocks were 1.2% lower during morning trade.
In an unexpected leadership shake-up at the H&M group, Helena Helmersson, who has been in the CEO role for four years, will be replaced by Daniel Ervér.
In a statement, Helmersson said she was stepping down with “mixed feelings” and was proud of how the firm navigated the Covid-19 pandemic and geopolitical challenges.
“However, it has been very demanding at times for me personally,” she said.
Ervér is currently the head of the group’s largest brand, H&M, and has been at the company for 18 years.
“The H&M group is in a strong position, with a positive profitability trend and good conditions to make further improvements in 2024,” group chair Karl-Johan Persson said.
“Daniel is a competent, experienced and respected leader and has the qualities needed to continue to develop the H&M group.”
Analysts at UBS said investors would be focusing on the “weak consumer environment” indicated by December and January sales, which were below consensus expectations.
This, along with a markdown guide for the first quarter, higher capital expenditure expectations and a fourth-quarter profit miss, would weigh on share prices in the short term, the UBS analysts added.
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