Byline: David Moin

NEW YORK — Next to Kohl’s, the greatest new competitive threat to American apparel chains is Hennes & Mauritz.
The Swedish chain, specializing in “disposable chic” fashion, wants to operate about 75 stores in the U.S. over the next three years. The company already is planning “market filler” stores and believes it can turn its U.S. operation profitable in about two years. Market filler stores are units that tap further into markets where there is already a presence.
That was the word from H&M chairman Stefan Persson, who was interviewed by WWD at the National Retail Federation annual convention on Tuesday, where he was awarded the prestigious NRF International Retailer of the Year Award.
Persson said the U.S. expansion targets the Boston, Washington, D.C., Philadelphia and New York areas, including Long Island. So far, 10 stores have opened in New Jersey and New York, but not yet on Long Island.
Persson expressed extreme satisfaction with H&M’s U.S. invasion, saying that despite the high costs, the frenzied reaction to H&M here, particularly in Manhattan, has produced sales way beyond expectations, spelling a good future.
“We felt confident coming into America last year,” Persson said. “We have a niche here. We are offering something different. There’s a sameness in stores that seems to be settling over the globe. Maybe that makes life as an international retailer easier.”
He even hinted at the possibility of acquiring a U.S. chain, though not right away. “I wouldn’t say we would never do that,” he said. “There are no immediate plans. We’re not considering [a specific acquisition] at all.”
Persson seemed more definite about establishing e-commerce in the U.S. “We’re looking into it.” H&M has a Web site, but the company’s e-commerce operation is confined to Scandinavian countries.
Regarding market filler stores, Persson told WWD that H&M wants a second store in SoHo. The first is scheduled to open at 558 Broadway in the spring, and a second lease is being sought, hopefully for a fall opening, he disclosed. The second unit would offer a different assortment and would appeal to a separate age or income bracket. In Manhattan, H&M has stores on Fifth Avenue and 51st Street and on 34th Street between Fifth and Sixth Avenues.
There’s been some mystery over a future H&M store at the former Alexander’s site on 59th Street, across from Bloomingdale’s, where a multiuse project is being developed. Persson said a lease has been signed, but he expressed some frustration that progress on building the development — which would house other retail tenants, a hotel and office space — has been slow. “We would like to open as soon as possible. Everything depends on the building construction,” Persson said. Currently, he’s eyeing a fall 2002 opening there.
Beyond the Northeast, the company has not set expansion plans. “That will come later,” Persson said. He said that by containing the expansion, rather than spreading out quickly, costs like advertising and public relations would be held to reasonable levels.
“There’s great potential for us in the U.S.,” said Persson. Asked how many units could ultimately operate in the U.S., he replied: “We don’t have a number. We have to take it step by step. In two years, [the U.S. operation] could be profitable.”
Expansion costs have been bringing profits down recently. The chain’s high-profile advertising has been pricey; ad campaigns have featured celebrities like actress Chloe Sevigny, photographed wearing a $9 peasant top. Supermodel Gisele Bundchen appeared in a bikini in a later ad campaign .
Most of H&M’s international expansion this year is focused on the U.S., France, Germany, Spain and the U.K., he said. About 100 openings are slated, including some 20 to 25 in the U.S., bringing the chain up to around 800 stores. The company, based in Stockholm, operates stores in 14 countries. Yearend results from the company, which reported $3.8 billion in sales for 1999, are expected to be reported this week.

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