Hennes & Mauritz Restructuring for Growth

H&M, once Sweden's most valuable company, is undergoing a significant corporate restructuring led by CEO Daniel Ervér to revive its struggling business. The company has faced a credibility problem since 2015, losing half its market value due to record sales drops, inventory pileups, and a 62% drop in operating profit under former CEO Karl-Johan Persson. Ervér's strategy focuses on improving operating margins, reducing inventory levels, streamlining suppliers, and consolidating stores. Despite these efforts leading to richer operating margins and profits, sustained sales growth remains elusive, with sales sliding 1% in the first quarter. H&M struggles to compete with faster, more nimble rivals like Inditex (owner of Inditex — Zara) and ultra-low-cost online players such as Shein and Temu. The Persson family's increasing stake in H&M, now controlling over 86% of voting rights, has sparked speculation about the company potentially going private, which could provide latitude for long-term changes without immediate market pressure.