H&M chief executive Helena Helmersson is adamant that the “worst is behind us” and the fashion giant is ready for what comes next. Retail Week looks at how H&M is setting itself up for future growth.

H&M UY 2

H&M delivered strong results this week, with sales up 12% over the full-year period 

While some fashion retailers are still struggling to combat the impacts of the pandemic, H&M boss Helmersson is bullish about its position and plans for the future.

“Our strong recovery continues – customers are showing that they appreciate our collections and, by quickly taking decisive actions, we succeeded in managing the negative effects of the pandemic,” she says.

“Despite the tough challenges, we’ve ended the year strongly, with sales at the same level as before the pandemic with better profitability”

Helena Helmersson, H&M

“The extensive initiatives and investments that we’ve been making for many years have helped us create collections with the best combination of fashion, price, quality and sustainability.

“Despite the tough challenges, we’ve ended the year strongly, with sales at the same level as before the pandemic with better profitability.”

“After nearly two years focusing on managing a difficult situation, we’ve recovered well. We’re back to a more normalised situation with a strong financial position and good profitability, so this means we can go back to focusing fully on growth again.”

Table showing H&M sales in top 10 markets for q4 2021

H&M delivered strong results this week, with sales up 12% over the full-year period to November 30, 2021.

The jury is still out on whether the retail industry has entered a post-pandemic phase, but in Helmersson’s mind H&M has transitioned past its worst moments and is ready to set ambitious goals for the next decade. 

Bold goals for 2030

H&M’s primary target for the future is that by 2030 it will “double sales while at the same time halving carbon footprint”. Over the same period, it aims to grow its EBIT margin by 10%. 

Helena Helmersson, H&M CEO

H&M chief executive Helena Helmersson wants to give sustainability and profitability equal importance

Helmersson says she is looking to ensure that both sustainability and profitability are given equal importance.

“Not only are we going to ensure that customers all over the globe are making sustainable choices when they choose fashion and design, but we will also make sure that we grow within the planetary boundaries,” she explains.

“The answer to this is to move to a circular business model where the fibres in the garments should be able to be used over and over again, and also that one product can have several transactions.

“We need to decouple our growth from the carbon and climate footprint”

Helena Helmersson, H&M

“When we give this target, we don’t mean doubling the volume of clothing but doubling the revenues – we need to decouple our growth from the carbon and climate footprint.”

To do this, H&M has laid out a number of initiatives and made investments to set itself up for a more sustainable path.

A circular approach

Helmersson divides the retailer’s growth plan into three areas: the H&M brand, portfolio brands and business ventures, and investments and partnerships.

In terms of the core H&M brand, Helmersson plans to link it with the retailer’s resale platform Sellpy.

Table showing H&M brands by number of markets and expansion plans

“In this way, we will capitalise on and increase the value of the H&M brand, and strengthen our relationship with millions of existing customers all over the world, as well as attracting new customers,” she says.

The retailer’s loyalty programme – which currently has more than 150 million members – is a key area of focus, driving more sustainable behaviours by offering rewards for customers bringing their own bags to stores or donating items to H&M’s garment collection.

H&M has notably made investments in “around 20” new companies – such as textile recycling firms Renewcell and Ambercycle and sustainable material tech firm Infinited Fiber – to both elevate its growth strategy and play a part in its sustainable plans. 

“In a short time, these investments have created significant value, both financially and within the existing operations, for example by improving the customer experience or enabling innovation in sustainable materials,” Helmersson says. 

“In an industry in rapid transition, exciting opportunities arise and we’re constantly evaluating investments that could contribute to the H&M Group’s continued growth,” she adds.

H&M is also investing in its own infrastructure. The retailer has set aside SEK 3bn to plug into its supply chain, including creating new sustainable materials and transitioning to renewable energy.

Its new tool the Circulator, created in collaboration with the Ellen MacArthur Foundation, aims to embed circular principles into its own teams, guiding buyers to choose better materials and use resources more efficiently.

New opportunities

While sustainability will form part of H&M’s growth plans, the retailer has also been on a mission to optimise its store estate and take advantage of opportunities in new markets.

In the 2021 financial year, the H&M Group opened 104 new stores and closed 321, resulting in a net decrease for the year of 217. 

Table showing H&M's current store count by segment

For 2022, the plan is to open around 120 new stores and close around 240, making a net decrease of around 120. Most of the openings will be in growth markets, while the closures will mainly be in established markets.

The retailer is eyeing targets in Central and South America as well as Southeast Asia as it aims to grow its brand awareness in these regions post-pandemic.

“Our target will evolve as we see potential in new markets. We still have great potential outside of Europe to grow further”

Helena Helmersson, H&M

“We have opportunities to grow in different ways in different places. Of course, there’s a lot happening when it comes to channels, especially digital channels,” says Helmersson.

“When looking at stores, we will be net minus-120 – those will mainly be in the countries where we’ve been for a very long time, mainly Europe. Long-term, our target will evolve as we see potential in new markets. We still have great potential outside of Europe to grow further.”

It is clear that H&M is storming ahead of its competitors when making plans for the future and, with sustainability at its core, these plans are likely to resonate with customers and investors alike. 

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