Shares of H&M (ST:HMb) nosedived roughly 10% in Stockholm after the company reported a fourth-quarter sales decline and an unexpected departure of its CEO.
Notably, the company’s sales fell 1% in 2023 in local currencies, and 4% year-over-year in Q4.
Operating profit for the full fiscal year more than doubled to 14.5 billion Swedish krona ($1.4 billion), up from 7.17 billion krona in the year-ago quarter. For the Q4 alone, operating profit came in at 4.33 billion krona ($415.4 million), compared to 821 million a year earlier but below the 4.57 billion projected by analysts.
The operating profit margin fell to 7.2% from 7.8% in the previous quarter.
Moreover, the company’s CEO Helena Helmersson stepped down, four years after assuming the top role. Helmersson, who will be replaced by company veteran Daniel Erver, said the CEO role had been “very demanding,” telling the press she did not have the energy to continue.
“The H&M group is in a strong position, with a positive profitability trend and good conditions to make further improvements in 2024,” said the retailer’s chair, Karl-Johan Persson.
“Daniel is a competent, experienced and respected leader and has the qualities needed to continue to develop the H&M group.”
Looking ahead, H&M said it aims to achieve a 10% profit margin by 2024, reaffirming its 2021 objective to double sales by 2030. To meet this target, the company needs to boost its revenues by an average of 8% annually over the next six years.
“While the company has reiterated its "ambition" to reach a 10% margin in 2024, we expect that this will continue to be treated with scepticism by investors, with the unexpected CEO change also like raising further questions today,” Morgan Stanley analysts wrote in a note on Wednesday.