‘Racist’ hoodie adds to H&M’s woes
Once the darling of shoppers, H&M is now struggling to attract them and has been slow to develop its online offering.
The fast-fashion group is one of Sweden's largest export brands and industrial heavyweights, alongside Ikea, Spotify, Electrolux and Volvo.
Owned by the Persson family dynasty, H&M has been listed on the Stockholm stock exchange since 1974. It has collaborated with superstars such as Beyonce and Madonna, and prestigious fashion houses including Sonia Rykiel, Lanvin and Kenzo have designed exclusive collections for the group.
H&M is one of the most well-known brands in the world, with global brand consultancy Interbrand ranking it the 23rd best known company worldwide last year - ahead of Ikea and fashion luxury goods manufacturer Hermes.
But lately, H&M has struggled to lure shoppers into its 4,553 stores around the world and been slow to develop its online offering.
"It has been one of the toughest years for H&M," Mr Joakim Bornold, an economist at investment bank Nordnet, said, noting that the company's stock price has fallen by 35 per cent since January last year.
Last month, the group announced a 4 per cent drop in fourth quarter sales from the previous year, to 50.4 billion kronor (S$8.3 billion). Not only have H&M sales almost never declined, but the drop was bigger than analysts had expected.
H&M said last month it would be closing stores, but did not specify how many or where. The company will publish its full-year earnings report on Jan 31.
"They have failed in describing their vision for the e-commerce business and how they plan to compete with truly digital companies.
"That, combined with worse sales figures than expected, has affected investors' faith in the company," Mr Bornold said.
Chief executive Karl-Johan Persson rejected that analysis.
"Our digital strategy is crystal clear. E-commerce, for all our brands, is definitely a part of the company that is going very well and is profitable," said Mr Persson, 42, heir to the company founded by his grandfather Erling.
He has headed the group for eight years. Some observers have questioned whether he will soon be shown the door, though his father, Mr Stefan Persson, chairman of the board, has ruled out such a move.
As if the company's earnings were not problematic enough, H&M last week found itself in the middle of a social media storm, accused of racism.
Its online catalogue featured an advertisement of a black boy sporting a hoodie with the words "Coolest monkey in the jungle" on it.
According to Gothenburg University marketing professor Eva Ossiansson, the gaffe is a sign that H&M has lost its Midas touch.
"It signals that the company has problems to cope with, both in terms of how their business should develop with regard to e-commerce and the digitalisation in our society, as well as in their communication," she said.
The company tried to quash the criticism by apologising and withdrawing the advertisement and the item from sale, but the damage was done.
National Basketball Association superstar LeBron James expressed his anger on Instagram on Jan 9, hours after the garment was removed from sale, while Canadian singer The Weeknd, who collaborated with H&M on its spring and autumn collections last year, severed his contract with the company. - AFP