H&M Q4 sales shrink, extends Tmall deal, to add G-Eazy collab

By

Sandra Halliday

Published
Dec 15, 2017

Inditex may have beaten the tough market backdrop in its latest period but fellow fashion retail giant H&M hasn’t fared so well. The Swedish firm said Friday that while it “continued to grow globally during 2017 in a rapidly changing fashion industry,” Q4 sales dropped.

It also announced that its core brand will follow Monki with a Tmall launch in China, that it’s in “advanced discussions” about its remaining labels doing so, and that it will launch a menswear collab with G-Eazy next spring.

But first those Q4 figures. The three months to the end of November saw group sales including VAT falling 4% to SEK231.7 billion. Yet in local currencies, sales only fell by 2%, so currency issues are clearly having an effect, even if the sales picture still isn’t rosy with those factored-out.

The group continued to grow during the year but that growth was “dampened” by Q4 with sales in the latest period “significantly below the company’s own expectations.” 

It said that while online sales for both the H&M brand and its other labels "continued to develop well,” the quarter was weak for the H&M brand’s physical stores, “which were negatively affected by a continued challenging market situation with reduced footfall to stores due to the ongoing shift in the industry.”

In addition, there have been “imbalances in parts of the H&M brand’s assortment composition,” which in plain English means getting the product wrong. “In order to correct this, a number of actions have been taken [and] the management team of the H&M brand has recently been strengthened.”

The firm said that so it can “respond even quicker to customers’ fast-changing behaviour the company’s ongoing transformation journey is being accelerated.” Among other things, this includes a continued move towards omnichannel and “intensifying the optimisation of the H&M brand’s store portfolio – leading to more store closures and fewer openings.”

GOOD NEWS

But there was good news on Friday too with the firm announcing that it would extend its collaboration on Alibaba’s Tmall to the H&M brand and H&M Home.

H&M opened its first store in mainland China 10 years ago and its revenues there now add up to SEK11 billion (US$1.3 billion) through more than 500 physical stores and online. Its Monki brand has seen strong development in China since its launch on Tmall and that’s giving the group confidence to launch the H&M label itself there, but also to conduct talks regarding launches for its other brands.

And there was more good news as the company said multi-platinum recording artist and producer G-Eazy, who releases his new album The Beautiful & Damned worldwide today, has worked with H&M to develop “new season H&M pieces that define his on-point style.” 

The G-Eazy x H&M collection will drop on March 1 at H&M stores worldwide, as well as online.

“G-Eazy is such a cool guy, he defines the menswear moment right now and it’s been a real pleasure to work with him on these sharp pieces. We love his unique take on streetwear with tailoring, and his love of checks and vivid colour,” said Andreas Löwenstam, H&M’s men’s head of design.