Persson defends H&M’s business model

Weak sales in March and swelling stocks took the edge off a result that for H&M was surprisingly positive. One of the pieces of news in H&M’s quarterly report was that the company is adding another concept to its portfolio when it opens the first store under the brand Arket in London, along with online stores in 18 European countries.

CEO Karl-Johan Persson explains that when something new is developed, as with COS and & Other Stories, there are initial high costs but, for example, COS now has a turnover of over 10 billion kronor. “The prices in Arket are around the same level as COS and Stories, with a major focus on quality. We have a great team here in Stockholm and have worked on this for a year and a half. It is not like any of our other concepts,” says Persson.

H&M has had a tough start to the year, 4% growth in local currency during the first quarter and 7% in March. However Persson says the company is still aiming for its goal of 10-15% growth per year. He says it has become more difficult but the operating margins could still increase. Addressing online issues, Karl-Johan Persson says, “I think that it is a misunderstanding that we are falling behind online… The model is working, even if we could develop it further.”