Fashion brand H&M has announced further supply chain investment following disappointing year-end results.
In its end of year report, the Swedish brand said it would invest in new technologies to make its supply chain faster, more flexible and more responsive to “mirror our customers’ fast changing needs”.
H&M recorded below expected growth of 3% in 2017, with international sales in local currencies increasing to SEK200bn ($25bn). The brand also performed poorly in the last quarter of 2017, where sales decreased by 2% on the year before to SEK50.4bn ($6.4m), amounting to gross profits of SEK27.9bn ($3.5bn).
While online sales were strong, the brand’s performance was poorer in its physical stores, where footfall is falling and “changes in customer behaviour are being felt most strongly”.
This is not the first time H&M has invested in its supply chain off the back of poor results. In April last year it announced an overhaul of its supply chain and the creation of a new brand after a fall in profits caused the firm to fall behind its main rival Zara. At the time a Goldman Sachs report revealed H&M had lead times twice as long as Zara’s owner Inditex.
In the end of year results just published, H&M launched a brand Afound that will be a marketplace selling discounted products from both H&M and other brands.
Its supply chain investment is also part of a wider, four-point plan to help the firm capitalise on online sales and reinvigorate its struggling physical stores.
The plan includes investing in analytics and intelligence to improve its retail assortment planning, supply chain and sales. The firm will also put more investment into its technology foundation to broaden its use of technology including cloud computing, RFID – used to connect physical items to the internet of things – and 3D printing.
Karl-Johan Persson, CEO of H&M, said: “The fashion industry is changing fast. At the heart of the transformation is digitalisation and it is driving the need to transform and re-think faster and faster.
“This is presenting many challenges but we believe we are well placed to adjust to the new dynamics and take advantage of the opportunities in front of us.”
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