H&M admits omnichannel mistakes as profits tumble
H&M saw pre-tax profits slump to £442 million in its fourth quarter to the end of November, down from £667 million a year earlier. Full year figures also showed pre-tax profits fell 13% to £1.9 billion after sales rose by a weaker-than-expected 4%.
The Swedish fashion giant admitted that it had struggled to adapt to the rapid growth of e-commerce. Karl-Johan Persson, Chief Executive at H&M, said: “2017 was a year where we made more steps forward and did more groundwork for the future, but we have also made some mistakes that have slowed us down. The fashion industry is changing fast. At the heart of the transformation is digitisation and it is driving the need to transform and re-think faster and faster.”
The retailer pointed to “weakness in physical stores where the changes in customer behaviour are being felt most strongly and footfall has reduced with more sales online”. It plans to open around 390 new stores in 2018, but will also shut approximately 170. “The industry changes are challenging everyone and this will continue in 2018,” Persson commented.
E-commerce backlash
Earlier this month, H&M apologised after an image of a hoodie-wearing black child, accompanied by the slogan “coolest monkey in the jungle”, appeared on its UK website. The retailer received a fierce social media backlash, with people slamming it as “offensive”, “irresponsible” and “racist”. Blogger Stephanie Yeboah wrote: “Whose idea was it at @hm to have this little sweet black boy wear a jumper that says ‘coolest monkey in the jungle’? I mean. What.”
An H&M spokeswoman responded: “This image has now been removed from all H&M channels and we apologise to anyone this may have offended.”