Swedish retail giant H&M is facing a significant downturn as its shares plummeted by 8% at 09:05 a.m. London time on Wednesday.
This decline comes in the wake of the company’s announcement of weaker sales and the unexpected departure of its chief executive, Helena Helmersson, who has been at the helm for the past four years.
The company reported a 1% decrease in sales for 2023 in local currencies, with a more pronounced 4% drop in the fourth quarter. This decline in sales has prompted the company to intensify its cost-cutting efforts, prioritizing profitability over revenues.
In a surprising move, Helena Helmersson will be succeeded by Daniel Ervér, the current head of the H&M brand, who has been with the company for 18 years.
Helmersson, in a statement, expressed her mixed feelings about stepping down and highlighted the challenges the company has faced, particularly in navigating the pandemic and geopolitical uncertainties. She also acknowledged the personal demands of her role as CEO.
The market’s reaction to these developments has been swift, with H&M’s stock taking a hit. The company’s decision to maintain its dividend of SEK6.50 per share may provide some reassurance to investors amidst the leadership transition and the challenging sales environment.
H&M’s future under the leadership of Daniel Ervér, and its efforts to address the decline in sales and adapt to the evolving retail landscape, will be closely watched by industry observers and investors.
The company’s ability to reverse the sales trend and maintain its position in the global retail market will be a key focus in the coming months.