Hennes & Mauritz AB has appointed Daniel Arbor as chief executive officer after the Swedish fast fashion group struggled to improve profitability under predecessor Helena Helmarsson. The unexpected move surprised investors.
Elver, a 42-year-old company veteran currently in charge of the H&M brand, will take over immediately. Helmerson said Wednesday that he resigned after four years as CEO with “mixed feelings”.
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A sudden change in management came after H&M reported lower-than-expected fourth-quarter profits, sending shares down as much as 11%, the biggest intraday decline in nearly two years. .
During Mr. Helmersson's tenure, H&M has faced a pandemic, stubbornly high inventory levels that have recently begun to ease, and competition from long-time rivals Zara and start-ups like Shein, which has reduced its market value by 5%. Lost one.
Arbor began working as a summer intern at H&M in 2005 and held various merchandising and purchasing manager roles within the company. For the past four years, she has been in charge of the group's largest H&M brand.
“Daniel is a capable, experienced and respected leader,” Chairman Karl-Johan Persson said in a statement.
But given his long tenure at H&M, analysts doubted whether he would bring about a change in direction.
“We remain unconvinced and think sales and margins will be weak,” Bernstein analyst William Woods said. “The new CEO does not necessarily have the authority to take drastic steps to turn the business around.”
Sales got off to a slow start in the final quarter ending in November, as intense heat in some parts of Europe suppressed demand. H&M said sales had rebounded by mid-October as temperatures cooled.
Operating profit rose to 4.33 billion kronor ($420 million), below the 4.76 billion kronor expected by analysts. Inventory was down 12% year-over-year and accounted for 15.8% of sales for the 12-month period.
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The company remains firmly committed to its long-term goal of operating margins above 10%, with ambitions to reach that level by the full year 2024.
Bloomberg Intelligence says:
Hennes & Mauritz's sudden CEO change comes as the company's EBIT margin continues to move towards the company's 10% target, which looks ambitious for 2024. With new president Daniel Arbor in charge of the H&M brand, there won't be any major changes in strategy. However, efforts to reduce his inventory to less than 100 days could be sped up, which could add flexibility to in-season purchases.
— Charles Allen, BI Retail Industry Analyst
H&M still misses 10% EBIT margin target, replaces CEO: reaction
H&M, owned by Sweden's Persson family, announced new share buyback obligations and a proposed dividend of 6.5 kronor per share.
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