H&M reshuffles at top as profit growth pleases market

Swedish fashion giant H&M appointed company veteran Helena Helmersson as chief executive officer on Thursday as it reported its first rise in annual profit since 2015 and pleased the market with strong fourth-quarter profit growth.

Helmersson, 46, has been with H&M for over two decades and has held positions from chief operating officer to head of sustainability and global head of production. She replaces the founder's grandson Karl-Johan Persson, who moves to the chairman role.

"I think it is a sensible succession. Karl-Johan is not going anywhere, in reality he has just got a change of mandate, and Helena has been around for some time," said Santander analyst Rebecca McClellan.

Karl-Johan replaces his father, 72-year-old outgoing chairman Stefan Persson, marking a shift to a younger generation at the top of the company. Shares surged as much as 10 percent after the world's no. 2 fashion retailer also beat earnings expectations for the fourth quarter. H&M is recovering from years of sliding profits and mounting inventories due to slowing footfall at its core H&M-branded stores.

Profit in the September through November quarter was 5.40 billion crowns ($569 million), up from a year-ago 4.35 billion. Analysts had on average forecast a profit of 4.78 billion crowns, according to Refinitiv data. Big investments in logistics, digital technology, new store concepts and independent brands to meet changing shopping habits and tougher competition helped push annual net sales 11 percent higher in Swedish crowns.

"The ongoing transformation work has contributed to continued positive sales development, with more full-price sales, lower markdowns and increased market share," the company said in a statement.

The outbreak of the newly-identified coronavirus in China had a negative impact on sales in that country at the end of January, the outgoing CEO said at a press conference to accompany the results in Stockholm on Thursdsay.

H&M rival, market leader and Zara owner Inditex, also promoted its chief operating officer to chief executive officer last May. Both chief executives have a strong sustainability remit, underlining how fashion companies are keen to prioritise their environmental strategies at a time of a public backlash against cheap, throwaway clothing.