H&M’s top shareholder to step down as chairman

Stefan Persson, the controlling shareholder of Hennes & Mauritz, is stepping down as chairman of the Swedish fast-fashion group after 20 years to make way for his son, the current chief executive.

Karl-Johan Persson will be proposed as new chairman at the annual meeting in May after a tumultuous decade in which the Swedish group relinquished its position as the world’s leading fashion retailer to Inditex, the Spanish owner of Zara.

He has been replaced as chief executive by current chief operating officer Helena Helmersson, the first woman in the role, as H&M continues to grapple with a seismic shift from physical stores towards online sales.

“It is a natural change, after 20 years as chairman, to hand over to Karl-Johan, who has been CEO for more than 10 years,” Mr Persson said on Thursday. “I will continue to be a committed owner, just as today, but from a different position.”

The transfer of power will need to be confirmed by H&M’s nomination committee, made up of its largest shareholders, but the Persson family controls more than three-quarters of votes.

Investors not in the family have long questioned Karl-Johan’s performance as chief, asking whether an outsider would have been given so much time to turn round the company after its operating margin fell by two-thirds during his tenure. H&M’s share price was essentially the same on the morning of his departure as it was when he took over in July 2009, while shares in Inditex have more than quadrupled over the same period.

But in recent quarters, Karl-Johan’s turnround plan for H&M has borne fruit, lifting shares by more than a third in the past year. They rose a further 9 per cent on Thursday.

“There’s been some challenges — the industry has gone through a huge shift,” he told the Financial Times. “But, all in all, we should be proud of the work that we have done and we have a positive development now after some tough years.”

Further evidence of H&M’s recovery came on Thursday with its fourth-quarter report, which showed pre-tax profits had risen 24 per cent to SKr5.4bn ($560m) compared with a year earlier on sales up 9 per cent to SKr61.7bn.

The change at the top will also include a change in chief financial officer. Karl-Johan Persson has asked the incumbent, Jyrki Tervonen, to become head of Ramsbury Invest, the Persson family investment vehicle that owns the controlling stake in H&M. Mr Tervonen will be replaced by Adam Karlsson, current head of controlling for the H&M brand.

The group’s strategy appears unlikely to change under Ms Helmersson, who has worked at H&M for 23 years including as sustainability manager and a production manager based in Hong Kong.

“We have set a plan we are confident in,” Karl-Johan said. “It’s a plan that we continually have to adapt and refine to the environment we find ourselves in.”

H&M was criticised by shareholders for continuing to open large numbers of physical stores even as online shopping took off. But it has scaled back its plans significantly and in 2020 aims to open only 25 stores on a net basis, the lowest figure in decades.

The group’s board proposed an unchanged dividend of SKr9.75 per share after years of investors fearing it could be cut, arguing that the business was showing “gradual improvement” while capital spending would fall this year.