In the world of fashion retailing, where shopping is fast moving online and stores try to keep inventories closely matched to sales, even a small stack of unsold clothes can be a burden. One of the largest Fast Fashion giants in the H&M itself become a victim of fast changes of fashion and its impact on the business.
The report has revealed that H&M has a mammoth $4.3 billion pile of shirts, dresses, and accessories, which is struggling with a mounting stack of unsold inventory. In the competition of changing the collections every week, FF brands had to free their stores replacing so-called old (Maybe like one-month-old) garments. When fashion is being refilled so fast, stalks of solid waste is increasing not only on the earth, now we see how the warehouses of FF brands are also struggling with those unsold products.
H&M outlined the buildup in its latest quarterly report on 27th March, raising questions of whether the company is able to adapt to the fierce competition and changing consumer demands reshaping the global apparel market.
The decline was the first in two decades. The company said in their report, the pile of unsold stock had grown 7 percent in the past year and was now worth nearly 35 billion Swedish kronor.
Analysts have been pressing Karl-Johan Persson, the company’s chief executive, over the issue. Inventory levels were up. H&M was opening 220 new stores and expanding its e-commerce operations, and so needed to fill the racks said, Karl-Johan.
According to the report, operating profit fell 62 percent in the three months through February, sending its shares to their lowest closing price since 2005 on the Stockholm stock exchange.
But while luxury brands have enjoyed a rebound in fortunes in recent months, fueled by millennial appetite and a recovery in demand from the lucrative Chinese market, mass-market companies have had to deal with enormous changes. In the digital era, particularly as growing numbers of shoppers choose to buy from their smartphones and become more quality conscious.
Analysts have been downbeat on the Swedish company’s outlook. Rahul Sharma, the founder of Neev Capital, called H&M “a slow-motion wreck” after the release of the first-quarter results
H&M has insisted it has a plan, saying it would slash prices to reduce the stockpile and slow its expansion in stores. It said it hoped its online business would expand 25 percent this year.