H&M Now Wants to Sell You Makeup, Sofas and Crocs
Fast-fashion giant is diversifying its products as it wrestles with weak sales
H&M HM.B -0.32%decrease; red down pointing triangle Hennes & Mauritz is moving further beyond its eponymous clothing label, doubling down on beauty products, housewares and selling products from other brands to draw in more shoppers.
The retailer is opening stand-alone beauty and home stores even as it continues to close its namesake clothing shops. Meanwhile, it is expanding the handful of other chains it owns including upmarket brand Cos and street-fashion label Weekday. It is also selling more third-party brands, including Adidas and New Balance sneakers, in its stores and online.
The moves come as H&M works to develop its growth strategy in a bid to revive stagnant sales.
“We have really been looking into customer demand,” Chief Executive Helena Helmersson said in an interview. While that has partly involved refreshing H&M’s core clothing ranges to re-engage the consumer, she said, “part of this work is asking: How can we broaden what we offer?”
Sales growth at H&M, once a rapidly growing pioneer of fast fashion, has stalled in recent years. Excess inventories and the Covid-19 pandemic depressed sales, and now online fashion rivals including Shein are challenging the company on speed and price.
Moreover, Helmersson said, H&M had lost some cachet in particular with young female consumers, its core demographic, but is making progress in winning them back. The brand lost ground against rivals several years ago because its clothes were perceived as less trendy and its stores lacked excitement, according to analysts.
H&M’s revenue in 2022 was approximately the same as six years earlier. Growth has remained underwhelming so far this year. The company reported a 9% rise in revenue for the six months ended May 31, although its growth rate was 1% when stripping out currency fluctuations.
In response, analysts say, the Swedish company is diversifying.
Against the backdrop of the closure of hundreds of regular H&M fashion stores in recent years, the company has increased the number of H&M Home-branded stores—which sell everything from sofas to kitchenware to bed linen—to 32 from 11 before the pandemic.
It has also added homeware sections to 399 regular stores, and says its range is now available in most countries where it operates online. The company doesn’t break out sales of homewares but said the business performed well last year.
H&M is now looking to make a similar push into beauty and personal-care products. The company opened two flagship H&M Beauty-branded stores in Norway in April, selling body wash, razors and nail polish, among other products. The range is also sold online in several countries, with some products available in regular stores.
The next step in the push into cosmetics will be to open more beauty stores in Europe, Helmersson said.
H&M has since last year also embraced selling other companies’ products, including in its stores.
It now offers more than 70 other brands, including Crocs, Levi’s and Superdry, and says it plans to add more. In markets where H&M offers third-party labels, online consumers have the option of searching products by brand to see which are available alongside H&M’s own ranges.
“We see that customers spend more time with us if we offer a broader range of products,” Helmersson said. The company has also launched a sportswear brand, H&M Move, and started to sell secondhand clothing through its Sellpy resale platform.
Another area of focus for H&M is expanding its other brands, including Cos, Weekday and women’s-accessories label & Other Stories.
Sales growth at the company’s so-called portfolio brands, which also include Monki and Arket, has been much stronger than at its namesake operations. Last year, their sales rose 22%, roughly double the rate of the overall company.
Cos in particular has benefited from an effort to position the brand further upmarket by making improvements to the collection, including the recent launch of upscale occasionwear by Cos Atelier, Helmersson said. H&M doesn’t break out sales numbers by brand.
This group of brands constituted 12% of the company’s 4,399 worldwide stores as of May 31, with various new openings planned for this year, including Cos launching in Mexico.
The smaller brands are also available online in dozens of markets where they don’t have a physical presence and have been introduced to the main H&M online store in some markets.
H&M recently said it would combine its Weekday and Monki brands, as well as revive its Cheap Monday affordable-denim brand several years after shutting it.
Helmersson said the move was partly intended to create a destination led by Weekday that would appeal to younger consumers.
While analysts expect H&M’s performance to improve this year, with demand for its clothing lines picking up in early summer, some say that breaking into new categories could be a challenge.
The beauty industry, for example, is already crowded and fiercely competitive, said Jelena Sokolova, an analyst at Morningstar.
Still, broadening what is on offer in the typical H&M store, while maintaining a focus on affordable and attractive fashion, “could help make H&M more exciting again,” she said.