Fashion giant H&M has suffered a sales setback after admitting efforts to streamline stock levels left some stores unable to keep up with customer demand.
The Swedish retailer revealed sales fell in the first half of its financial year, with revenues dropping 3 per cent to 104.4 billion Swedish krona — around £8.1 billion — compared with the same period last year.
The slowdown was particularly painful in Western Europe, H&M’s most profitable region, where sales dropped 5 per cent year-on-year.
Chief executive Daniel Erver admitted the company’s drive to tighten inventory controls had created unexpected problems, with some customers unable to find the products they wanted.
“The tighter inventory management has, however, in some cases affected our ability to fully meet demand,” he said.
The fashion giant said it had been reducing complexity across the business and improving how it manages stock, but acknowledged it needed to strike a better balance between availability and efficiency.
Mr Erver insisted the changes would strengthen the business over time, arguing that modernising stores and improving operations would boost profitability.
The retailer said it was operating in an increasingly uncertain environment, with shoppers facing cost pressures and the fashion industry undergoing rapid change.
“The improvements we have made in recent years have strengthened profitability, simplified operations and increased our ability to act closer to the customer,” Mr Erver said.
But the figures underline the challenge facing one of the world’s biggest high-street names as it attempts to compete in a fiercely competitive fashion market.
H&M’s strategy of becoming leaner and more efficient may improve margins — but the company now faces the delicate task of ensuring cost-cutting does not leave customers walking away empty-handed.
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