H&M appoints new CEO in surprise move as profits lag
Daniel Ervér will take over the H&M group with immediate effect amid a fall in sales and competition from upstarts like Shein
H&M has appointed Daniel Ervér as chief executive officer, jarring investors with a surprise move after the Swedish fast-fashion group struggled to boost profitability under predecessor Helena Helmersson.
The 42-year-old Ervér, a company veteran currently responsible for the H&M brand, is taking over the group (which owns brands like & Other Stories, Monki and COS) immediately. Helmersson stepped down after four years as CEO with “mixed feelings” she said today.
The sudden leadership switch came as H&M reported fourth-quarter profit that fell short of estimates, sending the shares down as much as 11 per cent, the biggest intraday decline in almost two years.
Under Helmersson’s tenure, H&M lost a fifth of its market value as it grappled with the pandemic, stubbornly high inventory levels that only recently began to moderate and competition from perennial rival Zara and upstarts like Shein.
Ervér started as a summer trainee at H&M in 2005 and held a variety of merchandising and purchasing manager roles across the company. For the last four years, he’s been responsible for the H&M brand, the group’s largest.
“Daniel is a competent, experienced and respected leader,” Chairman Karl-Johan Persson said in the statement.
Given his long tenure at H&M, however, analysts questioned whether he will bring a change of direction.
“We remain unconvinced and think they will deliver weak sales and weak margins,” Bernstein analyst William Woods said. “The new CEO will not necessarily have the mandate to take the radical steps to turnaround the business.”
In the last quarter, which ran through November, sales started slowly as hot weather in parts of Europe curbed demand. By mid-October sales had bounced back as temperatures cooled, H&M said.
Operating profit rose to 4.33 billion kronor (€387.5 million), trailing the 4.76 billion kronor estimate of analysts. Inventories fell 12 per cent from a year earlier and represented 15.8 per cent of rolling 12-month sales.
The company stuck with a target for its operating margin to exceed 10 per cent over time, with an ambition to reach that level for full-year 2024.