H&M Group has reported a lift in full-year profits, and announced its chairman Stefan Persson is to step down after more than 20 years at the company.
Persson has decided not to stand for re-election at the annual general meeting on 7 May 2020. He will be succeeded by H&M Group CEO Karl-Johan Persson.
H&M chief operating officer Helena Helmersson has become CEO of the H&M Group, effective today.
She joined H&M’s buying department in 1997 and held various roles within buying and production thereafter.
For just over a year she has been COO, with responsibility for expansion, logistics, production, IT, advanced analytics and AI.
The group today reported a year-on-year increase in gross profit to SEK122.5bn (£9.7bn) between 1 December 2018 and 30 November 2019. Its gross margin was 52.6%.
Net sales increased by 11% to reach SEK232.8bn (£18.57bn) in the same period. This was attributed to more full-price sales, lower markdowns and increased market share.
The company said this year’s increase in profit means that SEK86m (£6.9m) has been allocated to the H&M Incentive Program (HIP), a fund set up for all employees.
In the fourth quarter ended 30 November, H&M group’s sales including VAT increased 9% to SEK61.7bn (£4.9bn) – a 5% rise in local currencies.
Profit after financial items increased by 24% to SEK5.4bn (£430m) during the quarter. Before the allocation to HIP, profit during the period increased by 26%.
“The H&M group’s transformation work continues to bear fruit,” said Karl-Johan Persson.
“Increased full-price sales and decreased markdowns contributed to an improvement in profit for the full year and in the fourth quarter, when we achieved a 25% increase in operating profit while maintaining a high level of activity in our transformation work. It is clear from our well-received collections and increased market share that customers appreciate the initiatives we have taken. The composition and level of the stock-in-trade continue to improve, and we expect a decrease in markdowns again in the first quarter – for the sixth successive quarter.”
He added: ”This positive performance shows that we are on the right track. I would like to thank all employees of the H&M group for their fantastic work and commitment over the past year. It is pleasing to note that the increase in full-year profits means we can contribute a further SEK86 million to the H&M Incentive Program, which is for all employees of the H&M group.
”In view of the ongoing transformation of fashion retail, we have been making significant and necessary investments for several years to secure the H&M group’s position and long-term development. Among other things, we have invested in digitalisation, a more efficient supply chain – including new logistics centres and logistics systems, and in tech infrastructure, advanced analytics and AI. We are now seeing multiple positive effects of these initiatives, providing resources and support for our continued transformation work.
“Our highest priority is to ensure the best customer offering for all our brands and we will continue to invest going forward in order to offer the best combination of fashion, quality, price and sustainability. The customer experience in store and online is constantly being improved and we are also testing various new services to help our customers achieve a sustainable lifestyle. Our digital and physical channels are becoming increasingly integrated and to ensure a relevant presence in each market we are accelerating our optimisation of the store portfolio, including renegotiations, closures and rebuilds.”
In 2020 H&M Group plans to open around 200 new stores, and close around 175. Most of the store openings will be in South America, Russia, Eastern Europe and Asia (excluding China), while the closures will take place mainly in Europe, the US and China.
The group recently entered into an agreement with a new franchise partner in central America, where the first H&M store is expected to open in Panama at the end of 2020.
It also plans to launch an H&M website in Australia, and introduce H&M to South Korean ecommerce platform SSG.com.
”Looking ahead, we remain humbled considering the challenges brought by the shift in fashion retail in the form of new consumer behaviours and a fast-changing competitive landscape,” said Persson.
”The H&M Group’s transformation work is therefore continuing at a fast pace in all parts of the company. Performance over the past year shows that we are taking steps in the right direction. Combined with our long-term investments and our ambitious sustainability agenda, we are therefore optimistic about the future and the opportunities for the H&M Group to develop positively for many years to come.”