H&M CEO Sets Target to Double Retailer’s Sales by 2030

(Bloomberg) -- Hennes & Mauritz AB Chief Executive Officer Helena Helmersson set an ambitious goal of doubling the fast-fashion retailer’s sales by 2030 after she reduced discounts and started clearing out the company’s longstanding inventory buildup. 

Helmersson, who started leading H&M at the start of the pandemic, is also targeting an operating margin of more than 10% within three years. She was brought in to replace the grandson of H&M’s founder in January 2020 and started off by reducing the Swedish company’s store count. The stock rose as much as 7.4% Friday and later gave up some of those gains.

Helmersson is trying to put her first two years on the job behind her as H&M makes progress in reducing unsold garments. Still, the CEO faces difficult competition as cut-rate discount upstart SheIn gains online clients worldwide and Zara owner Inditex SA keeps expanding at higher levels of profitability. H&M also aims to cut its carbon emissions in half by the end of the decade.

The CEO called the goal “very ambitious.” Analysts had been expecting 2030 sales to be about 50% higher than the 2021 level, according to the average of four estimates.

To reach the goals, H&M is boosting investment to about 10 billion kronor ($1 billion) this year. The company isn’t out of the woods as inventory stood at $4 billion at the end of November and H&M hasn’t yet met its target of reducing it to the level of 12% to 14% of full-year sales.

Helmersson is betting she can achieve what her predecessor, Karl-Johan Persson, couldn’t. The company is relying less on markdowns, which H&M expects will boost profitability in the first quarter. H&M also is reducing costs, planning net closures of 120 stores this year, mostly in Europe. 

Pretax profit rose 64% to 6 billion kronor in the three months through November, beating analysts’ estimates. Sales in December and January are up 20%.

The company is rewarding investors with 3 billion-kronor share buyback program and it maintained its dividend at last year’s level.

Helmersson said long-term, sales growth should start increasing 10% to 15% a year again.

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