The coronavirus pandemic has been unkind to the British high street. In July, pubs reopened, only to have their opening hours capped at 10pm in September. In August, cinemas reopened. Then, last week, global chain Cineworld announced it would close all of its US and UK locations. Also last week, the world’s second biggest fashion retailer, H&M, announced it will close 250 stores globally.
The decision to shutter H&M stores comes, of course, as a result of the Covid-19-induced economic slump currently being felt around the world. According to H&M bosses, although sales had picked up between August and September, its September earnings were still around 5% lower than for the same month in 2019. The group’s pre-tax profits for the year up to 31 August were £210 million, reportedly better than expected, but with 166 of its stores permanently closed and local restrictions in place on others, it is clear the business is still struggling.
With 5,000 stores worldwide, it is currently unclear how many of H&M’s British outlets will cease trading. According to the BBC, H&M “has the contractual right to renegotiate or end leases on about a quarter of its stores every year” – something which has no doubt proven a handy get-out clause for the company in the current economic climate.
While a global pandemic is unchartered ground for everyone, H&M’s position at the start of 2020 was perhaps more precarious than other businesses. Stefan Persson, 73, stepped down as chairman of H&M in January, handing the reins to his son, Karl-Johan Persson, 45. Yet, Bloomberg suggests Karl-Johan’s appointment was in fact a strategic manoeuvre to free up the CEO spot – a position Karl-Johan had held since 2009. Bloomberg reports that under Karl-Johan’s leadership the company had struggled to compete with online retailers and had seen a meagre share gain when compared to its competitors during the same period.
Are H&M’s struggles perhaps emblematic of deeper issues behind the scenes? Is there more to the story than simply a temporary, Covid-related knock?
Erling Persson founded Hennes & Mauritz AB in Västerås, Sweden in 1947. The first store sold womenswear only, before expanding to sell hunting apparatus and men’s clothing in the following years. The chain rapidly grew throughout Europe, opening its first US site on Fifth Avenue in 2000.
In 2008 it began selling furniture as well, and shortly thereafter expanded into the Middle East and Asia. Following the launch of a number of related brands in 2009 and 2010 – including COS, Cheap Monday, Weekday and Monki – the group was named the 21st most valuable brand in the world by branding consultancy Interbrand, which estimated its worth at $12-16 billion.
Carl Stefan Erling Persson had engineered the expansion of his father’s company, having taken over as chairman in 1982. In 2013, Forbes estimated Stefan’s worth at $28 billion making him Sweden’s richest billionaire (among, at that time, a pool of 12) and the 17th richest person in the world.
Today, Stefan retains a 36% stake in H&M, as well as shares in the technology company Hexagon AB and a real estate empire spanning Paris, London, Stockholm and the 21-cottage village of Linkenholt in Hampshire, England, all obtained through his privately held real estate company Ramsbury Invest.
To unlock this article, please subscribe. Benefits include:
- 2 Magazines delivered to your door
- Direct offers and benefits with luxury hotels, clubs, restaurants and handpicked brands
- Invitations to a minimum of 4 member-only events each year
- Paywalled content — access to exclusive online features only for members
- 15% off selected brands online with Gentleman's Journal
- Your own Clubhouse membership card to redeem all the perks