H&M has been on a downhill tumble both financially and in the public’s eye since the racial ad and following events. It was clearly evident in Hennes & Mauritz Ab’s recent annual report, and it’ll worsen in the following months if H&M continues down this slippery slope. In the recent review of the latest financial results, Karl-Johan Persson, CEO of H&M’s parent company, commented:
“The weakness was in H&M’s physical stores where the changes in customer behavior are being felt most strongly and footfall has reduced with more sales online. In addition, some imbalances in certain aspects of the H&M brand’s assortment and composition also contributed to this weaker result.”
With more disappointment to follow, the company has announced it will close 170 stores, their largest number since 1998; however, they also will be opening 390 new ones. The company did not state which stores will be closing but they did hint that they are located within their major market, which the U.S. and Germany fall under.
Consumers, however, aren’t reading the financial reports but rather reading the look of H&M’s messy brick and mortar stores. Some believe that part of the reason H&M is struggling is their lack of keeping up with the fashion scene. Michael Dart, co-author of “Retail’s Seismic Shift,” elaborated:
“Consumers have felt that H&M has been somewhat drab and not on trend as much as competitors. With slower supply chain (unlike super-fast Zara), they have not responded as quickly to rapid shifts in taste and increasing fragmentation in the consumer market with many more small segments. As a result, they have had more markdowns, promotions and less inspiration for the consumer. It’s a formula for sagging results.”
The problem could lie with other factors, but for the time being it is safe to say H&M is on the come down after many years of successful fast fashion.