H&M: Racism scandal at H&M shows all is not well
Stockholm : A racism scandal at H&M
is the latest indication of management problems at the Swedish clothing giant,
once the darling of shoppers but now struggling to make the switch to e-commerce, analysts say.The fashion group is one of Sweden’s largest export
brands and industrial heavyweights, alongside Ikea, Spotify, Electrolux and
Volvo. Owned by the Persson family dynasty, it has been listed on the Stockholm
stock exchange since 1974.
It
has collaborated with superstars such as Beyoncé and Madonna, and prestigious
fashion houses including Sonia Rykiel, Lanvin and Kenzo have designed exclusive
collections for the group.H&M is one of the most well-known brands in the
world, with global consultancy Interbrand ranking it the 23rd best known
company worldwide in 2017 — ahead of Ikea and fashion luxury goods manufacturer
Hermes. But lately, H&M has struggled to lure shoppers into its 4,553
stores around the world and has been slow to develop its online offering.
"It’s [been] one of the toughest years for H&M," Joakim Bornold,
an economist at investment bank Nordnet told AFP, noting that the company’s
stock price had fallen 35% since January 2017.In December, the group announced
a 4% drop in fourth-quarter sales from the previous year, to 50.4-billion
kronor ($6.22bn). Not only have H&M sales almost never declined, but the
drop was bigger than analysts had expected.
H&M, which also owns the brands COS, Monki, Weekday, Cheap Monday, Arket
and H&M Home, said in December it would be closing stores but did not
specify how many or where.The company will publish its full-year earnings report on January 31.
"They have failed in describing their vision for the e-commerce business and how they plan to
compete with truly digital companies.
"That, combined with worse sales figures than expected, has affected
investors’ faith in the company," Bornold said. CEO Karl-Johan Persson
rejects that analysis. "Our digital strategy is crystal clear."E-commerce,
for all our brands, is definitely a part of the company that is going very well
and is profitable," insisted Persson, heir to the company founded by his
grandfather Erling. At 42, he has headed the group for eight years. Some observers
have asked whether he will soon be shown the door, although his father, board
chairman Stefan Persson, has ruled out such a move.
As if its earnings were not problematic enough, H&M is now in the midst of
a social media storm, accused of racism. Its online catalogue featured an
advertisement of a black boy sporting a hoodie with the words "Coolest
monkey in the jungle" written on it.According to Gothenburg University
marketing professor Eva Ossiansson, the gaffe is a sign that H&M has lost
its Midas touch. "It signals that the company has problems to cope with,
both in terms of how their business should develop with regard to e-commerce
and the digitalisation in our society, as well as in their communication."
H&M tried to quash the criticism by apologising and withdrawing the advert
and the item from sale.But the damage had
been done. US basketball superstar LeBron James expressed his anger on
Instagram, just hours after the garment was removed from sale. "@hm u got
us all wrong! And we ain’t going for it! Straight up!" James said,
including a photo of the same ad but with a crown superimposed on the boy’s
head and the text on the hooded sweater replaced by a crown. "Enough about
y’all and more of what I see when I look at this photo. I see a Young King!!
The ruler of the world, an untouchable Force that can never be denied!"
the athlete said.
Canadian singer The
Weeknd, who collaborated with H&M on its spring and autumn collections in
2017, severed his contract with the company."In some cases, in order to
create a buzz, companies like to stretch their communication and commercials
beyond borders. It’s risky," said Ossiansson.Lisa Magnusson, editorialist
at Swedish paper of reference Dagens Nyheter, meanwhile played down the
scandal, saying people should be more upset about the working conditions of the
labourers in Asia who make H&M clothes for pennies.She said that if every
garment were sold for just three kronor more, those workers’ salaries could be
doubled.
Source: Business Today,Nigeria
Monday, 15 January 2018