$4.3 Billion Worth of Unsold H&M Clothing?
Well, the truth is, the fashion giant is struggling with a stockpile of $4.3 billion worth of unsold H&M clothing; shirts, dresses, accessories, and others. It comes to a surprise after the high profile collaborations last fall, with Nicki Minaj and Erdem. The company saw a 62% drop in profits in the last three months through February. This declaring as its lowest closing price since 2005. But this isn’t their only issue. The Swedish retailer had to close stores in South Africa after the social media backlash of the racial ad they ran back in January. The expanding of unsold inventory began last year with an unexpected quarterly drop in sales. The decline stemmed from a period in which H&M expanded from a just a women’s store to a network of 4,700 stores internationally.
Goods News and more bad News
While this is bad news for the fashion giant, it is great news for everyone else. H&M plans to slash prices within the upcoming months to get rid of the gargantuan unsold inventory to resolve the issue. Despite the deep discount, it won’t be as easy an a fickle to sell while some of that stock includes months old Christmas sweaters and Halloween costumes. In addition, H&M plans to cut back on their opening of new stores and focus on expanding their online business by 25%. A hopeful lucrative plan to get the Swedish retailer back up in the world where consumers are skipping stores and prefer to buy online.
According to New York Times, this may not be enough to fix the problem and financial analysts are worried. Part of the problem is the millennial consumers are starting to opt for slow fashion. Well-made clothes rather than quick throwouts of cheap products. Milton Pedraza, CEO of Luxury Institute stated, “They’re are more interested in “classic and quality”, neither of which H&M has been able to deliver.” Seems like H&M has a lot more to deal with than what they bargained for.