Desperately Looking for Growth
Anyone who’s been following H&M recently, can easily notice that the company is evidently experimenting with new things. Faced with sluggish profits and growing competition from the likes of Zara, Amazon and Primark, H&M is betting big on various outlets such as COS and Arket, attempting to appeal to older crowds, who are more likely to spend more on less-generic items.
H&M is planning to add 80 stores from smaller brands in 2017, as well as 350 new H&M stores. Arket is a good example – it’s not just a higher-end clothing store, but also features home goods and even a Scandinavian-style cafe.
This shows that H&M is not only looking for additional clothing brands, but is interested in exploring whole new territories. Even though the strong Dollar has led to more expensive Asian supply, surging competition has pushed the company to slash prices, substantially impacting the profit margin. In March, the company’s shares have dropped to their lowest since June 2013, following reports that inventory levels were 30% [i]higher year-on-year.
This is why the company is looking to expand not just its number of stores, but also to diversify its product, trying to appeal to new types of customers. Inditex (that’s the company that owns Zara), has been employing a similar strategy since the 1990s.
Will the company’s expansion prove successful or is it best to invest resources in first fixing and then promoting the leading brand? At iFOREX you can invest in H&M share CFDs as well as in the share CFDs of other leading fashion brands including Intidex, Loui Vuitton, Adidas, Fast Retailing (Uniqlo) and Luxottica. Remember: You can always contact us with any question or comment and receive support via live chat, phone or email.
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