In an unexpected move, Hennes & Mauritz (H&M), the renowned Swedish fast-fashion brand, has witnessed a change in leadership as CEO Helena Helmersson stepped down on Wednesday (31 January) after four years at the helm.

Daniel Ervér, a veteran of 18 years within the company and head of H&M's primary brand, is to take the reins effective immediately.

This move followed H&M's prolonged struggle to enhance profitability and retain its global fashion retailer stature.

Financial strain and market response

H&M's woes are underscored by a decade-long decline in profit margins, ceding the title of the world's largest fashion retailer to Inditex's Zara. 

The fast-fashion giant also grappled with intensified competition from both budget-friendly Shein and higher-end Zara, resulting in a 10% drop in shares as fourth-quarter (Q4) profits failed to meet expectations. 

With a renewed focus on profitability over sheer sales volume, H&M reported a Q4 operating profit margin of 7.2%, a dip from the previous quarter.

Leadership perspectives and forward outlook

Despite these challenges, incoming CEO Ervér remained optimistic, asserting his dedication to creating enduring value for customers and driving profitable growth. 

“I am confident that we have a very good direction for where we’re heading. Cash flow and profitability are improving, which allows us to invest further and excite customers. We need to truly accelerate that,” Ervér told the Financial Times (FT).

Amidst private investor suggestions for external leadership, the founding Persson family, holding a substantial stake and votes, continues to favour internal candidates. 

Departing CEO Helmersson, with a tenure of 26 years at H&M, cited personal challenges in a demanding role as the impetus for her decision, reported the FT.

“A lot of unexpected things have happened. I feel it’s the right step to take. There has been a lot of hard work to get the company to a better place when it comes to profitability, cash flow and sustainability. Now we need to work more on sales activities and profitable growth,” she said.

As the baton passes to Ervér, H&M charts a course towards revitalising its standing in the fiercely competitive fashion landscape. 

H&M now confronts a pivotal moment with a change in leadership, seeking to navigate the complexities of the retail market.