At its first investors event this week, H&M Group said company-wide e-commerce sales last year were SEK 29 billion ($3.66 billion, as of Wednesday) and amounted to 12.5% of the H&M Group's total sales, according to a press release. The H&M group's online channel is "showing good profitability," accounting for 22% of its operating profit, according to company documents.
Store sales accounted for SEK 203 billion ($25.6 billion) or 87.5% of total sales, the company reported. The fast-fashion company's new business unit, including COS, Weekday, Cheap Monday, Monki, H&M Home, & Other Stories and Arket, together provided revenue of SEK 17 billion ($2.5 billion, as of Wednesday) or 7% of overall sales.
Executives warned that this year would be a building year, as they turn more forcefully to the internet. They expect same-stores to remain negative, due to bloated inventory forcing markdowns. E-commerce and new brands each should grow 25%, and sales in newly opened stores should add about 4%. From 2019 to 2022, new brand sales are expected to rise by at least 25% annually, reaching over SEK 50 billion ($6.31 billion) in 2022, with online sales expected to rise by around 20% per year, reaching SEK 75 billion ($9.46 billion) in 2022.
Valentine's Day this year for H&M was its first-ever investors day, when the fast-fashion retailer unveiled facts and figures it hoped they could love. The reveal included its online sales, which previously had been a mystery.
But CEO Karl-Johan Persson also asked for patience. The fast-fashion company last month, amid rising inventories and tanking sales, announced it's picking up the pace on a transformation plan that involves closing stores. Fourth quarter sales fell 4% to 50.39 billion kronor ($5.97 billion as of last month) from the same period a year ago and foot traffic to stores declined. Weak sales led to increased markdowns and handling costs that hit profits, which plunged 33%. Holiday sales edged up but only slightly. For the full year, sales rose 4% (or 3% in local currencies).
H&M is planning approximately 390 new stores, along with approximately 170 store closures for a net addition of 220 stores (down from 388 last year). Its launch of new sub-brands, which in recent weeks has included Afound and millennial-focused Nyden, as well as last year's Arket, has accelerated. Another brand is slated to open later this year. In his presentation Wednesday, Peter Ekeberg, acting head of new business, called the tactic a "proven business model" with "huge potential."
But some analysts weren't so sure, in light of the sub-labels' contribution of, all told, less than one-tenth of sales, according to Bloomberg. "The offering is the core problem," said Erik Sjostrom, a fund manager at H&M shareholder Skandia, according to Bloomberg. "The fashion, the price, the distribution and I believe they are off both in terms of fashion and price ... What I'm hearing is that everything except core H&M is doing well, but it's core H&M that's the main business."