H&M’s (HMb.ST) new CEO Daniel Ervér will face some vexing old problems. The $20 billion Swedish retailer said on Tuesday boss Helena Helmersson had decided to step down. She leaves after four very demanding years in which she failed to close a valuation gap with bigger rival Inditex (ITX.MC), the owner of Zara. Under Helmersson, who took the helm as the Covid-19 pandemic erupted in 2020, shares in H&M fell 19% against a 29% rise for the $133 billion Spanish group, per LSEG data.
H&M has for a while been suffering from an image problem, with Zara perceived as more upmarket. But rising inflation prompted consumers to be more selective, exacerbating H&M’s troubles. Sales for December and January, usually the best months for retailers, fell 4% year-on-year, triggering an 8% slide in H&M’s shares on Wednesday despite Ervér’s pledge to stick to a 10% profitability target. Investors will need more convincing that a new CEO who spent most of his career at the company can give H&M a new look. (By Lisa Jucca)
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(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)
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