For 2017, H&M’s operational profit went down 14 per cent. The retailer’s assortment missed the mark last year, which resulted in low comp sales, ballooning inventory levels, and an increase in markdown activity. Stock in trade was 16.9 per cent of net sales. The target is to come back to levels before 2016, which is 12 to 14 per cent.
H&M is experimenting with new store formats that focus on a more shopping-friendly environment thanks to less merchandise, a warmer feeling and more of an emphasis on experience. H&M is also applying features to make the stores easier to shop in. The brand will also make easier its new in-store mode on its app. Shoppers will be able to search the store assortment for specific items, get recommendations based on products available in nearby locations and become alerted whenever a product which is their favorite is in a store they happen to be passing by.
The company is planning to advance the company’s content, and it’s investing in a new photo studio for that purpose. For the fourth quarter of 2017 H&M saw a 34 per cent fall in profits on a four per cent drop in sales.