AFP / OLIVIER MORIN
Accusations of racism added to a string of strategic challenges for H & M
A racism scandal at H & M is the latest indication of management problems at the Swedish clothing industry, analysts say. The fast-fashion group is one of Sweden’s biggest export brands and heavyweights, alongside Ikea, Spotify, Electrolux and Volvo.
Owned by the Persson family dynasty, it has been listed on the Stockholm Stock Exchange since 1974. Beyoncé and Madonna, Sonia Rykiel, Lanvin and Kenzo have designed exclusive collections for the group. H & M is one of the most well-known brands in the world, with global brand consulting Interbrand ranking it 23rd best known company worldwide in 2017 – ahead of Ikea and fashion luxury goods manufacturer Hermes. But lately, H & M has struggled to lure shoppers into its 4,553 stores around the world, and has been slow to develop its online offering. “It’s been one of the toughest years for H & M,” Joakim Bornold, an economist at the Nordnet investment bank told AFP, noting that the company’s stock price has fallen by 35 percent since January 2017. In December, the group announced a breakthrough (5.0 billion euros, $ 6.22 billion). Not only have H & M sales, but the drop was bigger than analysts had expected. H & M, which also owns the brands COS, Monki, Weekday, Cheap Monday, Arket and H & M Home, said in December. The company will publish its full-year earnings report on January 31. “They’ve failed in describing their vision for e-commerce and business,” said Bornold. “That, combined with worse sales than expected, has affected investors’ faith in the company.” Chief Executive Karl-Johan Persson rejects that analysis. “Our digital strategy is crystal clear.E-commerce, for all our brands, is definitely a part of the company that is profitable and profitable,” Persson insists, heir to the company founded by his grandfather Erling. At 42, he has headed the group for eight years. Some observers have questioned whether he will be shown the door, though his father Stefan Persson, the chairman of the board, has ruled out such a move. – Racism scandal – As if the company’s earnings were not problematic, H & M last week found itself in the middle of a social media storm, accused of racism. Online catalog featured an advertisement of a boy in a joke with the words “Coolest monkey in the jungle” written on it. According to Gothenburg University marketing professor Eva Ossiansson, the gaffe is a sign that H & M has lost its Midas touch. “It signals that the company has problems with their business should be seen in terms of e-commerce and digitalization in our society,” she said.
GETTY PICTURES NORTH AMERICA / AFP / Maddie Meyer
LeBron James was not amused by the H & M ad
The company is trying to get rid of the problem. But the damage was done. NBA superstar LeBron James expressed his anger on Instagram on January 9, after the garment was removed from sale.
“@hm u got us all wrong! And we are not going for it! Straight up!” James said, including a photo of the same ad with a crown superimposed on the boy’s head, and the text on the hooded sweater replaced by a crown. “Enough about y’all and more of what I see when I look at this photo.” “I see a Young King! The ruler of the world, an untouchable Force that can never be denied!” the athlete said. Canadian R & B singer The Weeknd, who collaborated with H & M on its spring and autumn collections last year, meanwhile severed his contract with the company. “In some cases, companies like to stretch their communication and commercials beyond borders,” Ossiansson said, adding: “It’s risky.” Lisa Magnusson, editorialist at Swedish paper Dagens Nyheter, meanwhile played down the scandal, saying things should be more upset about the working conditions of the laborers in Asia who make H & M clothes for pennies. She noted that if every garment was sold for just three (0.3 euros, $ 0.37), those workers’ wages could be doubled.