H&M has announced the unexpected resignation of CEO Helena Helmersson amid the Swedish fashion retailer's lackluster sales and share performance against the fast-growing Chinese online store Shein.
The company's shares dropped 10% as the leadership change came as it earlier said that its sales for December and January fell by 4% compared to the previous year, indicating a poor key Christmas shopping period.
Helmersson said that the role she held for four years had been "very demanding" for her, telling reporters that she did not have the energy to continue in the post.
Her replacement, Daniel Erver, is an 18-year veteran of H&M and has been the head of the retailer's core H&M brand, a role he would keep alongside his CEO job.
Erver told Reuters that he voiced his interest in the role last December and the board approved of his pitch on Wednesday morning (Jan. 31).
Analysts Weigh In on H&M's Future
H&M only trails behind Inditex as the biggest listed fashion retailer. However, it has since struggled to compete with Zara and Shein, both of which have seen strong sales growth.
"I think the market will welcome the change after digesting the numbers," Oslo-based Storebrand portfolio manager Adil Shah. "Speculation that margin targets will not be met is one of the reasons being stated for the CEO change."
H&M has recently focused on profitability rather than sales volumes as it aimed to reach a 10% operating margin this year and cut costs by closing stores and laying off staff.
Erver told Reuters that the 10% goal on profitability would stay and that they would "work hard to make that goal happen."
Meanwhile, Karl-Johan Persson, H&M chairman and grandson of founder Erling Persson, said that the company was in a strong position with "good conditions to make further improvements" this year. The Persson family has a 51% stake in H&M.
However, H&M's shares further plunged by 9% on Wednesday after Helmersson's shock resignation.
