H&M has called time on a proposal to encourage shareholders to reinvest their dividends in new stock.

The proposal would have provided H&M with money to invest in business improvements, but proved too difficult to implement “from a technical perspective and because of time constraints”.

Earlier this month H&M posted “disappointing” fourth-quarter results after footfall declined and it battled to compete with online retailers. H&M’s profits plummeted 34% to £440m.

H&M chief executive Karl-Johan Persson conceded that last year’s sales had been “disappointing” and that strategic “mistakes” had been made.

He said then: “The fashion industry is changing fast. At the heart of the transformation is digitalisation and it is driving the need to transform and rethink faster and faster.”

H&M was investigating the option of offering shareholders an opportunity to reinvest their dividends in new H&M shares.

However, the retailer said yesterday: “The investigation has shown that the reinvestment plan would be difficult to implement, both from a technical perspective and because of time constraints.”

The retailer will now pay shareholders a dividend unchanged on the previous year.