PARIS — It’s taken four years, but Hennes & Mauritz AB finally has a flagship on the Avenue des Champs-Elysées.
The world’s third-largest fashion retailer today opened the doors of the store, designed by French architect Jean Nouvel, at number 88, marking a symbolic victory after protracted tussling with city authorities, who are trying to limit the presence of high-street retailers on the exclusive stretch.
Chief executive officer Karl-Johan Persson said it was important for H&M to be present on what has been dubbed “the world’s most beautiful avenue,” alongside brands ranging from Gap and Monoprix to Louis Vuitton and Cartier.
“The mix is fantastic, and I think it reflects the way people are dressing today,” he told WWD. “I think definitely this store adds something to the whole shopping experience on Champs-Elysées, so it’s good for us and good for tourists here, and Parisians.”
In the interview, Persson said negative external factors were likely to impact profitability in the months ahead, and hinted that change could be afoot on the designer collaboration front.
With 140 H&M stores and six units for its higher-priced COS concept, France is the second most important sales market for H&M, though far behind Germany.
Sales here totaled 6.57 billion Swedish kronor, or $896 million, in the nine months to Aug. 31, up from 6.19 billion kronor, or $779 million, in the same period a year earlier. Dollar amounts are calculated at average exchange rates for the period in question.
The retailer, which pioneered designer collaborations with its Karl Lagerfeld collection in 2004, will cement its Gallic ties when it launches the Lanvin for H&M line for women and men in 200 stores worldwide on Nov. 23.
Nouvel, who won the Pritzker Architecture Prize in 2008, has clad the three-story, 30,000-square-foot Champs-Elysées store in light sandstone to create a feeling of seamless transition from the pavement to the interior. Changing lights and moving screens complement the window displays.
It is only the second time H&M has recruited a prestigious architect to design a store, after working with Javier Mariscal in 2008 on its flagship in Portal de l’Angel in Barcelona.
Asked if H&M could move toward a more permanent relationship with a designer, similar to the one between Jil Sander and Japanese fashion giant Fast Retailing Co. Ltd, Persson replied, “Maybe, maybe. We don’t have anything to tell you today, but we’re looking at new things all the time.”
Creative thinking will be key in the coming months, as the retailer faces an increasingly challenging environment.
H&M last week reported that profits rose 22.6 percent in the third quarter, but warned that it would miss its target of 240 store openings worldwide in 2010 because the completion of some shopping malls, mainly in southern Europe, had been halted as a consequence of the weak economy. The company now expects to open 220 stores this year.
Persson noted that H&M took advantage of the downturn last year to snap up real estate left vacant by other retailers, upping its initial target of 225 store openings in 2009 to 250. Now that demand is heating up again, it has fewer alternatives when a deal is put on hold.
“Going forward, we still think that we can stick to our expansion goal of opening 10 to 15 percent [additional] new stores every year,” he said. However, he acknowledged the retail landscape is becoming more cutthroat. “Looking back 10 years and how it is today, the retail environment is definitely more competitive, and it will increase. There are more companies popping up all the time, and the best companies are improving,” Persson said.
Other external factors are also pressuring the bottom line. H&M said gross margin — a key measure of profitability — fell to 60.5 percent of sales in the third quarter from 61.6 percent in the year-ago period, and Persson warned it would come under further pressure.
“We are increasing like-for-like selling, so we’re happy with the development. It’s just that now, looking forward, there are external factors affecting us, and all other things being equal, it will affect the gross margin negatively,” he predicted.
“We have currency movements against us, we have the raw materials going against us, transport prices are up, the capacity surplus that we saw for quite some time at the suppliers — that is actually decreasing,” he explained.
Though the market will doubtless penalize any drop in profitability, Persson — who was named ceo last year — reiterated that the gross margin was not the company’s key target.
“Of course profitability is important, but we are a very customer-focused company,” he said. “For us, I don’t think it’s the right thing to steer the company after a certain gross margin.”
Instead, H&M is focusing on extending its reach in emerging markets. It will open its first store in Turkey in November and is looking to enter India, where Spanish rival Inditex’s Zara chain recently opened several stores.
“We are looking, but they have regulations there where you can’t own 100 percent of the company, and when we go into India, we want to have full control,” Persson said.
The annual Veuve Clicquot Polo Classic in Pacific Palisades this weekend drew Kate Hudson, Tracee Ellis Ross, Laura Dern and more. See pictures of the star-studded event on WWD.com. (📷: @chelsealaurenla) #wwdeye
In his new book “Hollywood Royale,” Andy Warhol’s Protégé Matthew Rolston celebrates the Eighties revival of Hollywood glamour. Featuring more than 100 portraits taken by Rolston from 1977 to 1993, the book contains photos of icons like Michael Jackson, Cyndi Lauper, and @drewbarrymore, pictured here in 1991. “Hollywood Royale,” out today, will be accompanied by an exhibition opening at Los Angeles’ Fahey/Klein Gallery on March 1. #wwdeye
"Nowadays when life is not so happy with everything going on in the world, I think people come to me for a little bit of whimsy and color and fun." - Designer Rebecca De Ravenel on her cult-favorite jewelry line. (📸 : @vsteves) #wwd40
“Everyone is talking about how the retail industry is struggling, but I think it’s an incredible time because brands who are doing something different and innovative are setting themselves up for the future,” said @adamgoldston, who founded the luxury athletic brand @apl with his brother @ryangoldsten. The Goldston’s are part of WWD’s 40 under 40: a group of industry notables. See the rest of the list on WWD.com. (📷: @vsteves) #wwd40
@eyeswoon blogger Athena Calderone debuted her first-ever cookbook, “Cook Beautiful,” which is heavily centered on the presentation and visual expression of food. Pictured here are her miso glazed carrots from the book. Get the recipe on WWD.com. (📷: @johnny_miller_) #wwdeye
“It’s passion that helps get anybody to a certain point and it’s what’s propelled me,” said Kith founder @ronniefieg, one of WWD’s 40 under 40: a group of industry notables who are changing the face of retail, fashion and beauty. Fieg, who opened a Manhattan flagship on October 7, began his career at age 13 as a stock boy and salesman for footwear chain David Z. “I think staying true to [my] beliefs, hard work and passion have gotten me to where [Kith] is today.” See the rest of the 40 at WWD.com. (📷: @vsteves) #wwd40
25-year-old @samweaving is about to break out this fall, starring in Netflix’s horror film “The Babysitter,” fittingly out today on Friday the 13th. That’s not the only place you’ll be seeing her, though — Weaving’s got a role Showtime’s “SMILF” and another alongside Frances McDormand and Woody Harrelson in “Three Billboards Outside Ebbing, Missouri.” Though she’s got a full plate at the moment, there’s one role she’s got her eye on: Marilyn Monroe. “I’m a little too young at the moment, but it’s on my bucket list,” the actress told WWD (📷: @dandoperalski) #wwdeye
BFF's Poppy Jamie and Suki Waterhouse celebrated the launch of their bag line Pop x Suki at Nordstrom last night. "The line is really about our friendship, and how we are so different but complement each other," said Waterhouse. 👯 (📷: Katie Jones) #wwdeye
After designing the new @louisvuitton and @bulgariofficial flagships and a @chanelofficial boutique opening in Japan, @petermarinoarchitect has another project on his plate: The Lobster Club. Located in the Seagram Building, it’s the famed architect’s first restaurant project in New York, serving up modern Japanese brasserie-style cuisine. Bronze hues, bespoke material detailing, blush and chartreuse tones and a heavy emphasis on Picasso can be seen throughout. Mark your calendars for Nov. 1 for the much-anticipated opening. (📷: @clint_spaulding) #wwdeye