Helena Helmersson, new H&M CEOH&M financial report presentation, Stockholm, Sweden - 30 Jan 2020

PARIS — It is now Helena Helmersson’s turn to take the reins of Hennes & Mauritz.

By naming Helmersson, 46, as its new chief executive officer, the fast-fashion retailer turned to an insider who has spent nearly 20 year working her way up the corporate ranks and knows the ins and outs of the global business, which has showed signs of stabilizing lately.

But even though Helmersson is an insider, the move also marks a decisive break as Karl-Johan Persson, who ran the H&M as ceo for the past decade and whose family founded the company, hands over control.

It makes Helmersson one of the highest-profile women ceo’s in fashion — an industry that depends on women as customers but has been slow to promote them up the corporate ladder.

She will both be in the spotlight and under pressure keep up the momentum at the sprawling company, which has more than 5,000 stores around the world and helped remake retail over the past two decades as a leader in the fast-fashion wave and now is trying to continue in an era of sustainability.

Investors clearly are cheering her on and sent shares of the company up 9.4 percent to 207.55 kronor in Stockholm.

The executive joined the H&M in 1997 as an economist in the buying department and has also been sustainability officer and production manager, based in Hong Kong. For the past year, she was responsible for logistics, production and other technology-related functions as chief operating officer — holding the position in the upper echelons of the company for only just over a year.

“She has great experience from many different roles in the company, she knows the company well,” Persson said. He added that she was a respected leader, open-minded and courageous.

“She is well-respected in the industry and comes across well in presentations,” said Richard Chamberlain, analyst with RBC.

Another analyst, who declined to be named because he is not authorized to speak to the press, noted that her wide range of experience inside the company made her “well-suited” for the position and suggested a “smooth transition.” Someone with more outside experience could bring a different perspective, he added.

The c-suite move came on the heels of the retailer’s fourth-quarter earnings report, which showed a 9 percent increase in gross profit. The company seized on the improvement of its performance to make the change, Persson said.

“Today is, I think, it’s a good moment for these changes….It’s also a good point in time since we have had a positive development after some tough years, and also have a very strong position,” Persson told analysts and journalists in a conference call.

Persson will replace his father Stefan Persson as chairman of the board, who is stepping down after two decades. Persson’s lieutenant, Jyrki Tervonen, chief financial officer of the group for the last decade, will become ceo of the group’s parent company Ramsbury Invest, effective in July.

Replacing Tervonen is Adam Karlsson, head of controlling at the brand H&M, who has worked for the company since 2003.

H&M, which also sells apparel under the labels Monki, Cos and & Other Stories, reported gross profit of 33.29 billion Swedish kronor, or $3.46 billion, over the fourth quarter, with the group noting an increase in full-priced sales helped boost performance.

“H&M has reported a stronger set of full-year results than we expected due to lower [operating expenses], which we think indicates operating leverage is coming through faster than expected,” Chamberlain said.

The company in December reported a 9 percent increase in sales over the fourth quarter ended Nov. 30, up 5 percent at constant currencies to 61.7 billion Swedish Kronor.

The group said sales in local currencies for the Dec. 1 to Jan. 28 period were up 5 percent at constant rates, and estimated the cost of markdowns in relation to sales would decrease between half a percentage point to 1 percentage point in the first quarter of this year.

The retailer has been undergoing a broad overhaul of operations, investing in technology and logistics, while revisiting the formats of its vast network of stores. Like other fast-fashion retailers, it struggled to off-load merchandise last year, and was caught up in spiraling discounting.

Spanish rival Inditex, which owns Zara, has been setting a fast pace for the industry, with e-commerce plans for all of its brands by the end of the year, with same-day and next day delivery in major markets.

H&M executives, who stressed they are seeing the fruits of their investments, recently opened a new high-tech logistics center in the U.K., which will replace several centers, serving both stores and online stocks. Other new logistics centers are slated to open elsewhere around the world, they added.

The company is working on upgrading services both in stores and online, rolling out features like “click and collect” offers whereby online orders can be picked up in a store.

It plans to add an online market in Australia and debut on e-commerce platform Ssg.com in South Korea this year.

As for physical stores, H&M is culling boutiques in mature markets like the U.S., Europe and China while it opens new stores in South America, Russia, Eastern Europe and other parts of Asia. The group continues to renegotiate store rentals, and Persson said rents are too high in many markets and will likely come down.

The company recently signed an agreement with a new franchise partner in Central America and plans to open its first store in Panama by the end of the year.

Persson sought to allay fears that the spread of the coronavirus could disrupt supplies dramatically, saying it would have a “marginal” effect, because the company has a sizable supply network around the world. Meanwhile, a number of store closures in China will likely weigh on sales, he said.

When it comes to consumer interest in sustainability, the group sees a big difference in the various markets, said Persson, noting the highest demand for environmentally friendly practices come from Nordic countries, Central Europe and the U.K.