New boss seeks to make H&M even faster at fashion

Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

H&M’s new boss has pledged that the Swedish fast-fashion chain will invest more in reacting quicker to new trends, including by bringing some of its manufacturing from Asia closer to its main markets.

Daniel Ervér, the 42-year-old company veteran who became chief executive on Wednesday, told the Financial Times that H&M would use improvements in profitability and cash flow last year to invest in its customer offering.

“One part is being faster to market,” he said. “We are digitalising processes. We are developing nearshoring capabilities — being quicker to react to new trends. We also want to leverage data from customers to be more precise in how we run our supply chain.”

The family-controlled group has been under pressure for more than a decade, losing its crown as the world’s largest fashion retailer to Spain’s Inditex — the owner of Zara — as well as suffering from a decline in profit margins.

H&M spent last year prioritising profitability over sales growth by closing stores and raising prices. But its full-year results, released on Wednesday alongside news of Ervér’s appointment, showed its profit margin missed analysts’ expectations in the fourth quarter, prompting a 10 per cent drop in its share price.

Analysts and investors have pointed to the Swedish group’s large manufacturing footprint in Asia and its relative inability to react fast to breaking fashion trends compared with Inditex, which has many factories closer to its main European markets. It has also been hit by the rise of lower-price retailers such as China’s Shein and Temu, as well as Primark before them.

Ervér said the new competition “requires us to react quicker” but that “really nailing price and fashion” is “doing something that lower-cost can’t”.

He added that after several years of closing more stores than it opened, H&M had…