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H&M Appoints New CEO in Surprise Move as Profit Margin Falls 

H&M logo is seen on a shop in Riga, Latvia January 30, 2020. (Reuters)
H&M logo is seen on a shop in Riga, Latvia January 30, 2020. (Reuters)
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H&M Appoints New CEO in Surprise Move as Profit Margin Falls 

H&M logo is seen on a shop in Riga, Latvia January 30, 2020. (Reuters)
H&M logo is seen on a shop in Riga, Latvia January 30, 2020. (Reuters)

H&M surprised investors on Wednesday with a new CEO, Daniel Erver, taking the role with immediate effect as the Swedish fashion retailer struggles to boost sales in a fiercely competitive market.

Outgoing CEO Helena Helmersson said she had decided to step down and leave H&M, saying the role has been very personally demanding.

The world's second-biggest listed fashion retailer after Inditex, H&M is aiming to reach an operating margin of 10% this year and has focused on profitability rather than cutting prices.

But H&M has struggled with its price-sensitive customers going to budget-friendly newcomer SHEIN, in addition to competition from Inditex's Zara.

H&M's fourth-quarter operating profit margin fell to 7.2% from 7.8% in the third quarter

Measured in local currencies, H&M said on Wednesday that sales from Dec. 1 to Jan. 29 - the start of its fiscal first quarter - fell by 4%, compared to an increase last year of 5%.

It posted a fourth-quarter operating profit of 4.33 billion crowns ($415.4 million), up from 821 million a year earlier but below the 4.57 billion expected by analysts in an LSEG poll.

The board of H&M proposed an unchanged dividend of 6.50 crowns per share, and said it would ask for authorization to buy back the group's own B shares.

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Fashion

Uniqlo Owner Seen Posting 24% Annual Profit Surge on Brand’s Overseas Push

Fast Retailing's Uniqlo sign boards are displayed at a casual clothing store in Tokyo, Japan January 11, 2023. (Reuters)
Fast Retailing's Uniqlo sign boards are displayed at a casual clothing store in Tokyo, Japan January 11, 2023. (Reuters)
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Uniqlo Owner Seen Posting 24% Annual Profit Surge on Brand’s Overseas Push

Fast Retailing's Uniqlo sign boards are displayed at a casual clothing store in Tokyo, Japan January 11, 2023. (Reuters)
Fast Retailing's Uniqlo sign boards are displayed at a casual clothing store in Tokyo, Japan January 11, 2023. (Reuters)

The Japanese owner of casual wear giant Uniqlo is projected to beat its own forecast in what would be a third straight year of record profits as its brand makes inroads in western markets and its business in China recovers.

Fast Retailing's operating profit in the 12 months through August likely rose 24% from a year earlier to 478.3 billion yen, based on the average of 15 analyst estimates compiled by LSEG ahead of the company's earnings on Thursday.

That's marginally higher than the company's 475 billion yen forecast, which it lifted in July citing a strong performance in the second half.

Fast Retailing's shares have been on a tear, reaching a record high this week. Key factors going forward will be sales of fall and winter items in Japan and whether the company can reinvigorate its business in China, according to independent analyst Mark Chadwick.

"Investor attention will turn to whether Fast Retailing's measures in Greater China successfully reverse the earnings decline caused by weak consumer sentiment and increased competition," Chadwick wrote on the Smartkarma platform.

With more than 900 stores in China, Fast Retailing has long been seen as a bellwether for the retail sector in the world's second-biggest economy. COVID restrictions weighed on results there for years, but now the challenge is a sluggish economy that has weighed on consumer confidence.

Greater China CEO Pan Ning acknowledged in July that the market is maturing, with the company scaling back store openings and adopting a scrap and build strategy for underperforming locations.

When COVID lockdowns depressed sales in China, the company focused more on expansions in North America and Europe. Both sectors delivered strong sales and profits through the first nine months of fiscal 2024.

Company founder Tadashi Yanai aims to make Fast Retailing the world's biggest fashion retailer, with the operators of Zara and H&M standing in the way. He believes consumers are more focused on value than luxury in a post-COVID world, a trend that works in Uniqlo's favor.

Yanai, Japan's richest man, is scheduled to speak at the company's earnings briefing on Thursday, as well as Uniqlo president Daisuke Tsukagoshi, whom Yanai has spoken of as a possible successor.

Fast Retailing's shares have climbed 43% so far in 2024, outperforming a 16% advance in the benchmark Nikkei index.