Bloomberg

Unmade in China: H&M CEO Helena Helmersson’s Terrible Year

(Bloomberg) – Just 14 months after starting this position, Helena Helmersson, CEO of Hennes & Mauritz AB, has already seen more challenges than some longtime CEOs during their careers. She faces the brunt of the Chinese government’s anger against clothing retailers criticizing violations of the law in the cotton-producing region of Xinjiang. The timing couldn’t be worse for Helmersson, who was busy managing the closings of mass stores amid pandemic lockdowns while trying to manage his clothes supply. “It was of course a challenging year,” said Helmersson in a telephone interview. She learned a lot about “how to lead in a more unpredictable world”. Last week the Communist Youth League and the People’s Liberation Army issued a September H&M statement expressing concern over reports of Uyghurs in forced labor. This made the company a symbol of foreign companies interfering in internal Chinese politics. Then online card stores disappeared, Chinese e-commerce platforms dropped the brand, and around 20 H&M stores closed, some from landlords. The backlash was quick and much stronger than previous reactions when foreign brands crossed political boundaries. The unwanted attention comes as the economy in China, the biggest engine of growth for Swedish companies, is being brought back to life. China accounted for 6% of sales in the last quarter, making it the third largest market after the US and Germany. It’s not just having to weigh customers who want to know how their clothes are made against China’s growing assertiveness and its weight in the market. Western brands like Nike Inc., Adidas AG and Under Armor Inc. have also caught fire for promising not to use Xinjiang cotton. The region supplies around 80% of the material for China. H & M’s attempt to smooth things over by reiterating its commitment to China on Wednesday stalled. In an opinion piece, China’s state broadcaster called the statement a “second rate PR essay that lacks sincerity and is full of empty words,” asks H&M why H&M does not apologize to consumers. While store closings are challenging in China, they represent only a fraction of the 502 stores in the country, and those spurts tend to calm down. H&M is an industry role model when it comes to fair working conditions like fighting Forced labor goes, said Emilie Westholm, head of responsible investment and corporate governance at Folksam, which holds 0.6% of the shares. “The new CEO has continued on the path of H & M with high ambitions and goals in the area of ​​sustainability.” Read more: Boycott battles may not go in the direction of China: Clara Ferreira MarquesRough StartHelmersson, 47, became the first female CEO of fast fashion -Company. Karl-Johan Persson (46), who is now the chairman, took on the role of the founding family offspring. She had just started the pandemic and saw stocks drop a whopping 50% in their first six weeks. The stock has now scraped back most of it. Widespread bans aside, Helmersson faced a scandal after some H&M fashion designers gave a hat a product name that contained a racist bow in the heat of protests against Black Lives Matter as they prepared for the job after they got in 1997 had entered the company’s purchasing department. She was Head of Sustainability for five years and then headed global production from Hong Kong. She was Chief Operating Officer for a little over a year before becoming CEO. The pandemic aside, it inherited the largest inventory of any major apparel manufacturer that H&M has struggled with for five years. She initiated the largest cut in the branch network by H & M and announced plans to permanently close around 300 branches and cut 16,000 full-time positions. The branch closings “will be required in the long run but is a defensive move,” said Nicklas Skogman, a Handelsbanken Capital Markets analyst who has a hold rating on the stock. Lockdowns resulted in up to 80% of H & M’s 5,000 stores being temporarily closed at its peak in mid-April. It was touch-and-go throughout. For example, 1,800 stores were closed in January, tentative reopenings brought that number down to 1,050 by mid-March, but now it’s back to 1,500. “Helena and the team did a fantastic job during a very challenging time,” Persson told an email statement. Those ups and downs didn’t make the Swedish clothing giant’s warehouse management easier, but Helmersson said she was pleased with how H&M has adjusted through the lockdowns. Inventory at the end of the first quarter was 37 billion crowns ($ 4.2 billion), or 21.5% of 12-month sales, compared to 20.4% last year. That’s twice as much as Zara owner Inditex SA.H&M shouldn’t be counted in China, which, along with Bangladesh, is the largest apparel manufacturing market. Helmersson’s challenge will be to weather the storm and deal with the pandemic again. “Flexibility and customer focus were critical to management over the past year and will continue to be critical,” said Helmersson. “I believe in a strong rebound as we are beginning to see that hopefully the restrictions will be lifted in the future.” For more articles like this, visit bloomberg.com. Subscribe us now to stay up to date with the most trusted business news source. © 2021 Bloomberg LP