H&M must raise the bar to counter fierce fast-fashion competition, says CEO
STOCKHOLM, Jan 30 (Reuters) - H&M cannot win on price alone and must make its clothes more trendy and of higher-quality in the fiercely competitive fast-fashion sector, its CEO Daniel Erver told Reuters.
In his first year as CEO, Erver has spearheaded investments in marketing to boost the H&M (HMb.ST), opens new tab brand's appeal, as well as a push to speed up product development as the retailer tries to regain market share from rivals like Inditex-owned Zara.
H&M must keep improving its products in terms of quality and trendiness in order to give customers value for money, Erver said in an interview on Thursday after the Swedish company's fourth-quarter sales missed expectations.
"Just competing on lowest price will not cut it for us, we need to step up and raise the bar," Erver said.
Online-only retailer Shein has undercut H&M and Zara with ultra-low prices for dresses, tops, jeans and accessories, forcing them to find new ways of differentiating themselves.
H&M will keep investing in social media influencers and collaborations with pop stars like Charli XCX, Erver said, to reach more fashion-conscious young women.
"To start accelerating the work of gaining market share and ... positioning ourselves, it's been really important to win the fashion-interested female customer, and especially the young generation, because she will shape the industry for the future," Erver said.
As well as increasing its reach through social media, drawing more customers through its doors is key for H&M, which has been cutting its overall store count but refurbishing some in key cities.
H&M's premium Arket brand is opening its first stores in Austria, Norway, Greece and Ireland this year. These will include cafés, as part of a push to get shoppers to linger for longer.
While not satisfied with the overall performance, Erver said H&M's higher fourth quarter operating profit margin was partly thanks to a stronger product mix.
H&M's chief financial officer, in a separate interview on Thursday, said changes it is making to shorten its supply chain and speed up its design process could cut the time between product idea and arrival in-store by as much as 50%.
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Reuters
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TRADING DAY Good vibrations turn sour
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If you have more time to read, here are a few articles I recommend to help you make sense of what happened in markets today. Today's Key Market Moves Good vibrations turn sour It's a "done" deal, according to U.S. President Donald Trump, although the he and Chinese leader Xi Jinping still have to finalize the wording of the trade agreement between the two superpowers and sign off on it. The main points of the deal appear to be: China will remove export restrictions on rare earth minerals and other key industrial components; U.S. tariffs on Chinese goods will total 55%; Chinese tariffs on U.S. goods will total 10%. Trump could not have been more enthusiastic in his praise for the agreement on Wednesday, and Commerce Secretary Howard Lutnick said 'deal after deal' with other countries will follow in the weeks ahead. Yet, judging by the relatively muted market reaction, investors are less enthused. And given the chaotic and unpredictable nature of the Trump administration's tariff announcements thus far, the irony of Treasury Secretary Scott Bessent calling on China to be a "reliable partner" in trade negotiations will not be lost on some observers. Especially, one suspects, in Beijing. Based on these proposed China levies, and with the US expected to conclude more trade deals in the coming weeks, the overall U.S. effective tariff rate will be lower than feared a couple of months ago. That's a relief. But the effective tariff rate of around 15% that many economists expect will still be significantly higher than the 2.5% rate at the end of last year, and would be the highest since the 1930s. Also, as the May inflation figures showed, tariffs have yet to be felt on prices. Investors - and Fed policymakers, who meet next week - are in a state of limbo. How will corporate profits and consumer spending be affected? What proportion of the tariffs will companies "swallow", and how much will they pass on to their customers? Zooming out, inflation appears to be cooling around the world, although this trend is expected to reverse once tariffs start to fuel higher goods price inflation. Figures on Wednesday showed that U.S. consumer inflation and Japanese wholesale inflation were lower than expected in May. These reports follow similar numbers from Europe recently, and China remains stuck in its battle against deflation. Next up is India, which releases consumer inflation figures on Thursday, which are expected to show annual inflation slowed to 3.0% in May, the lowest in more than six years. Another focus for investors on Thursday will be the auction of 30-year U.S. Treasury bonds. US stocks-bonds warnings flash amber again Calm has descended on U.S. markets following the 'Liberation Day' tariff turmoil of early April. But Wall Street's rally has revived questions about U.S. equity valuations, as stocks once again look super pricey compared to bonds. Since the chaotic days of early April, U.S. equities have rebounded fiercely, with the S&P 500 up 25%, putting the Shiller cyclically adjusted price-earnings (CAPE) ratio for the index in the 94th percentile going back to the 1950s, according to bond giant PIMCO. Stocks are looking expensive in absolute terms, and in relation to bonds. The equity risk premium (ERP), the difference between equity yields and bond yields, is near historically low levels. According to analysts at PIMCO, the ERP is now zero. The previous two times it fell to zero or below were in 1987 and 1996–2001. In both instances, the ultra-low ERP precipitated a steep equity drawdown and sharp fall in long-dated bond yields. "The U.S. equity risk premium ... is exceptionally low by historical standards," they wrote in their five-year outlook on Tuesday. 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They do not reflect the views of Reuters News, which, under the Trust Principles, opens new tab, is committed to integrity, independence, and freedom from bias.
Scottish Sun
2 hours ago
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I tested flavoured ciders… fresh-flavoured £2.75 winner tasted just like a can of Lilt and would be great with cheese
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'Effortlessly stylish' New Look dress now 25% off in sale
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