If the warehouses remain full of unsold goods, the price of the items is lowered, people can buy more products, but the company is in crisis because the operating profit is too low to pay off the investment: here is the scary theorem of Hennes & Mauritz. In this first quarter, the Swedish brand known all over the world with the simple acronym H&M saw the stock increase by 7% and suffered a collapse of 61% of gross profit in addition to a loss of 6% that goes to add to those of 2017. If you continue in this negative loop we should say goodbye to its low cost prices. A downward game where you can really hurt yourself. Being a cost leader is not a static situation; out – in the market – there will always be someone willing to offer a lower price. In fact, Primark has arrived to break the eggs in the H&M basket where everything really has an extra-ordinary cost. From the Irish colossus, 62 euros and 50 cents are needed to go out from head to foot, socks not included: cap (5 €), sunglasses (1.5 €), tie dye sweatshirt (16 €), marinière t-shirt (5 €) , skinny jeans (€ 22), shoes (€ 13).
From H&M for similar products, at least from the aspect, they serve 79 euros and 94 cents, or about 28% more. With the money saved, you can buy a backpack from Primark and still have something for an aperitif.
On a 2009 article on Affari&Finanza, the sociologist Giampaolo Fabris wrote: “Proposing the traditional offer at strongly reduced prices not only heavily affects the income statement, but also impairs a subsequent return of the consumer to previous price levels”. The fast fashion brand that in its recent history has invented the capsule collections with the most important names in luxury fashion (see among many Karl Lagerfeld, Stella McCartney, Viktor & Rolf, Roberto Cavalli, Jimmy Choo, Lanvin, Versace) is certainly not naive. There are many projects in progress. “2018 is a transition year for the group, in which we will accelerate our transformation to seize the opportunities generated by rapid digitalisation,” said CEO Karl-Johan Perssond.
At the beginning of the year, H&M announced the launch of its first outlet. It will be called Afound and will host the fashion and lifestyle collections of the brands of the Swedish group (Cos, & Other Stories, Monki, Weekday, Cheap Monday, H&M Home and Arket) but also stocks of other Italian brands, obviously at discounted prices. Also at the beginning of the year, H&M launched the Conscius Exclusive 2018 collection, made up of items in organic and recycled materials such as Econil, which derives from fishing nets and nylon waste: they will be available online starting from April 19th. On February 28th, during the Paris Fashion Week, H&M presented the Studio S/S 2018 collection with the format “see now, buy now”, inspired by the urban sophistication and intrinsic minimalism of Japan. In mid-March, with the Global Change Awards 2018, the H&M foundation offered a € 1 million prize to reward the 5 innovations that will change fashion production and consumption patterns. In short, meat at the fire seems to have a lot of it.