Helena Helmersson, designated CEO of Swedish clothing retail giant H&M, in Stockholm, January 30 2020. Picture: TT NEWS AGENCY/AFP/SWEDEN OUT/JONAS EKSTROMER
Helena Helmersson, designated CEO of Swedish clothing retail giant H&M, in Stockholm, January 30 2020. Picture: TT NEWS AGENCY/AFP/SWEDEN OUT/JONAS EKSTROMER

Stockholm — Swedish fashion giant H&M appointed company veteran Helena Helmersson as CEO on Thursday as it reported its first rise in annual profit since 2015 and pleased the market with unexpectedly strong fourth-quarter profit growth.

Helmersson has been with H&M for more than two decades and has held positions from head of sustainability and global head of production to, most recently, COO. She replaces the founder’s grandson Karl-Johan Persson, who moves to the role of chair.

Helmersson has been involved in setting strategy in recent years. “I want to continue with the plan that is already on the table, and then, of course, also keep a close eye on the world around us and tweak the plan as we go along,” she said.

Santander analyst Rebecca McClellan said the succession looked sensible. “Karl-Johan is not going anywhere, in reality he has just got a change of mandate, and Helena has been around for some time.” 

In May, Karl-Johan will move into the role vacated by his father, Stefan Persson — the chair for more than 20 years — marking a shift to a younger generation at the top of the company.

Recovery on track

Shares surged as much as 10% after the world’s number two fashion retailer also beat earnings expectations for the fourth quarter. H&M is recovering from years of sliding profits and mounting inventories due to slowing footfall at its core H&M-branded stores.

Profit in the quarter from September to November was 5.40-billion krona ($569m), up from 4.35-billion a year before. Analysts had, on average, forecast a profit of 4.78-billion krona, according to Refinitiv data.

Big investments in logistics, digital technology, new store concepts and independent brands to meet changing shopping habits and tougher competition helped push annual net sales 11% higher in Swedish krona.

“The ongoing transformation work has contributed to continued positive sales development, with more full-price sales, lower markdowns and increased market share,” the company said in a statement.

Outgoing chair Stefan Persson, who was CEO from 1982 to 1997, said in a rare interview that it is a good time to step down now that the company is in good condition.

“The industry is struggling with huge problems, and I would say that we have now managed to transform, even though there are still many challenges ahead, in a way that has left us with our financial position more or less intact and able to also weather future challenges,” he said.

H&M said in its earnings report that its financial position is strong. Its net debt to profit before depreciation and amortisation ratio, which it targets keeping below 1.0, improved to 0.2 in the quarter.

No revolution

Stefan said he expected little change in strategy under the new regime. “Helena has been with the company for a long time, and in such positions there will not be any revolution, as such. I at least feel confident that she really has placed the issue of sustainability on the map.” 

Helmersson, who will be H&M’s first female CEO, was the group’s head of sustainability at the time of the Rana Plaza disaster in Bangladesh that killed 1,135 garment workers. The incident prompted huge soul-searching in the industry about factory safety.

H&M’s biggest rival, market leader and Zara owner Inditex, also promoted its COO to CEO last May.

Both CEOs have a strong sustainability remit, underlining how keen fashion companies are to prioritise their environmental strategies at a time of public backlash against cheap, throwaway clothing.

“We want to keep growing, and that’s what we’ll do. But in future we won’t be able to use the natural resources we depend on today, not in the same way,” Helmersson said.

The outbreak of the new coronavirus in China had a negative impact on sales in that country at the end of January, outgoing CEO Persson said at a press conference to accompany the results in Stockholm on Thursday.

Reuters