While challenging, the store closures in China represent only a fraction of the 502 shops it has in the country, and these flare-ups tend to settle down.

H&M is a role model in the industry when it comes to fair working conditions, such as opposing forced labour, said Emilie Westholm, head of responsible investments and corporate governance at Folksam, which holds 0.6 per cent of the stock. “The new CEO has continued on H&M’s path of high ambitions and targets in the sustainability area.”

Helmersson, 47, became the first female CEO of the fast-fashion company, taking over from founding family scion Karl-Johan Persson, 46, who’s now chairman.

She had just started in the role when the pandemic hit, and saw the shares plunge a whopping 50 per cent in her first six weeks. The stock has now clawed most of that back.

Besides dealing with the widespread lockdowns, Helmersson had to navigate a scandal after some H&M clothing designers gave a hat a product name containing a racist slur in the heat of the Black Lives Matter protests.

Helmersson was prepared for the job, having advanced through the ranks since joining the company’s purchasing department in 1997. She served as sustainability chief for five years, then headed global production from Hong Kong. She was chief operating officer for just over a year before becoming CEO.

Pandemic aside, she inherited the biggest inventory backlog of any major clothing apparel maker, an issue H&M had been wrestling with for five years. She initiated H&M’s biggest retrenchment of its store network, announcing plans to permanently shut about 300 stores and cut 16,000 full-time job equivalents.

Closing stores “will be needed in the long run, but it’s a defensive move,” said Nicklas Skogman, an analyst Handelsbanken Capital Markets, who has a hold rating on the stock.

Lockdowns led to as many as 80 per cent of H&M’s 5000 stores being closed temporarily at the peak in mid-April. It’s been touch-and-go throughout. For example, 1800 stores were closed in January, tentative reopenings brought that number down to 1050 by mid-March, but that’s back to 1500 now.

“Helena and the team have done a fantastic job during a very challenging period,” Persson said in an emailed statement.

That ebb and flow hasn’t made the Swedish clothing giant’s warehouse management easier, but Helmersson said she was happy with how H&M has adapted through the lockdowns. Its inventory stood at 37 billion kronor ($4.2 billion), or 21.5 per cent of 12-month revenue at the end of its first quarter, up from 20.4 per cent three months earlier. That’s double the level of Zara owner Inditex SA.

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H&M shouldn’t be counted out in China, which together with Bangladesh is its biggest production market for clothing. Helmersson’s challenge will be to ride out the storm and get back to managing through the pandemic.

“Flexibility and customer focus have been key in how to manage this past year, and will also be key to us going forward,” Helmersson said. “I do believe in a strong recovery as we gradually can see that restrictions hopefully will be lifted going forward.”

Bloomberg

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Source: | This article originally belongs to smh.com.au

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