H&M’s non-H&M brands look expensive and unlikely to pay for themselves, says John Ryan

What has Inditex got right that H&M hasn’t?

When the Spanish giant unveiled its results last week, perhaps the most interesting part was that the brands that are not Zara accounted for just over a third of the €25.34bn group revenue.

Or put another way, collectively Pull & Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Uterqüe and Zara Home (which is operated as standalone stores, for the most part) took €8.74bn – thoroughly respectable by any fashion operation’s standards.

Now contrast this with the H&M group. It actually has six fascias excluding the H&M stores, yet in store numbers alone they account for just north of 10% of the total, bringing in 7% of total sales.

On this reckoning, there might be two opinions: either the Stockholm powers that be have little faith in the power of individual non-H&M brands, or they are adopting a ‘flagship’ strategy for those beyond the mothership fascia.

Different strategies

Whichever is the case, although a lot of noise has been made about Arket (which now has a total of six outposts – another opened in Amsterdam a couple of weeks ago) and the same was true of Cos when it first appeared, they are not bringing home the cured reindeer.

There is a sense of flailing around, but there is a single thing that most of the non-H&M brands have in common: they are a lot more expensive than the garments on the rails in the stores of the parent brand.

“Inditex is more Catholic in the distribution of its non-Zara stores and, just as importantly, some of its fascias are no more expensive than its largest brand”

This is fine if all that’s required is the metropolitan crowd and, to judge by the locations of Cos, & other stories and Arket, this is probably the case. They are to be found almost exclusively in the centres of very big cities.

Inditex is more Catholic in the distribution of its non-Zara stores and, just as importantly, some of its fascias are no more expensive than its largest brand.

Follow this one through and it’s no surprise that Inditex’s ‘other’ brands would appear to be better at generating sales than those of H&M.

All of which leads almost inexorably to the conclusion that to all intents and purposes, the H&M brands are not much more than corporate window dressing and the company might be better advised to concentrate on the brand where the money is coming from.

Zara, meanwhile, looks like both its brands and the strategy for them are about right.