It’s a new day where shopping is not always done in the stores. Online shopping has become very popular and like Toys R Us, a lot of ‘once was my favorite’ stores are suffering from it. However for H&M, it’s not the only factor causing their gigantic slump.
Reports from the NY Times confirm that H&M had their first decline in two decades. Last year, they had an unexpected drop in their sales and an increase of unsold inventory. The profit fell 62% in the last quarter. Currently, they’re sitting on $4.3 billion of unsold clothes. H&M’s CEO Karl-Johan Persson made a statement on the website that the weak sales will result in “substantial clearance sales in the first quarter”. H&M was opening 220 new stores which caused the increase in inventory before the decline.
Within the last few months, H&M has been struggling to overcome the public criticism over a hoodie with the line “coolest monkey in the jungle”. The boy in the ad wearing the hoodie was a black child. It caused outrage across the world as it spread across social media as racism. Shoppers then started to boycott and protest by destroying their stores. They had to close their stores in South Africa due to backlash.
However, Persson claims the bad weather, online shopping and rapid transformation caused the drop. His plan is to slow down production of new stores and slash prices. A good sale might help a little but the backlash for the hoodie photo may stick forever.