H&M Group has various problems it needs to solve if it is going to bounce back from the current slump - and it needs to act now if it’s to avoid things getting any worse.
This week saw H&M report yet another set of less-than-stellar sales figures, ahead of its six month results due on June 19.
On their own, the results are perhaps not that startling – like-for-likes are down 4% for the second quarter, which is a slight underperformance of the BRC’s figures for the UK but not something to panic about.
But when you stand it in contrast to the likes of Primark – which in April reported a profit increase of 55% over six months, with its international expansion picking up steam – or Asos – which on the same day as H&M, reported sales were up 43% in the quarter – it becomes apparent that the seemingly indefatigable Swedish giant could be getting tired.
There are, as our lead story this week points out, numerous problems with H&M and not all of them can be attributed to the weather (despite its attempt to blame both cold and hot weather).
Store environment should be one of H&M’s top priorities. The recent refurb at its Oxford Street flagship got thumbs up in our Shopwatch segment but that needs to be replicated throughout its store portfolio as a matter of urgency as our recent His Or Miss in Manchester’s Trafford Centre highlighted.
H&M’s website also needs an overhaul – as does its entire approach to online transactions. I’ve written about this before but still feel quite strongly about it. Having recently shopped online at H&M’s sister fascia & Other Stories (and taken more than an hour to buy a jumper and accessories) I’d suggest it’s a problem that needs to be addressed throughout the group.
None of this would really matter, though, if the product were hitting the target but the consensus among both analysts and the Drapers team seems to be that it has gone off the boil of late. Even its latest collaboration, with French designer Isabel Marant, has been greeted with a shrug from our fashion director Ian Wright (although consumer press has been more positive).
In a sector as competitive as young fashion, even a momentary lapse of judgement can have pretty serious repercussions. You only have to consider New Look’s fortunes to see that.
Interestingly, one analyst pointed out that it wasn’t only H&M that has been having a tough time of late. Spanish giant Inditex also put out middling results this week, albeit a stronger performance than its Swedish rival. Both businesses are of course far greater and more dominant globally than the likes of Primark and Asos, but that doesn’t mean they aren’t feeling a pinch by the two new kids on the block trading in Europe and beyond.
The good news is that H&M is still hugely successful and has both the time and money to turn things around. But companies who once dominated the high streets have disappeared in the past from failing to spot the warning signs early on – H&M must start acting now if it is to keep ahead of the competition.