H&M Group busy on multiple projects in 2023 as investment grows 40% (2024)

The H&M group recently published mixed results for fiscal 2022, with sales up 6% to €19.9 billion but net profit down by two-thirds, and has unveiled its strategy for the current year. As a first step, H&M has decided to significantly increase its investment spending in 2023. The group’s capex is in fact set to grow from SEK7 billion to SEK10 billion (€893 million), equivalent to an increase of over 40%. It is worth noting that, before the pandemic, the group’s investment budget reached SEK13 billion a year.

The Swedish group, owner of H&M, COS, Monki, & Other stories and Arket, indicated that its top priority remains the flagship H&M label, whose “product range and customer experience, both in-store and online, [H&M] is constantly working to improve.” Among the new features introduced by H&M, same-day or next-day delivery, self-checkouts, clothes rental, and the ‘visual search’ tool, which enables customers to receive product recommendations by providing an image that inspires them.

The group, which currently operates 4,465 stores, said it is boosting investment in the “supply chain, digital tech and AI” in order to make these innovations a reality, and notably announced it will deploy a new logistics hub in the Czech Republic in 2025.

H&M's managing director Helena Helmersson underlined that the group remains committed to growing its other labels too, while emphasising her desire to diversify beyond ready-to-wear, saying she intends to develop and introduce “new sportswear, beauty and home decoration projects.” For example, H&M has recently launched a major programme to promote sporting activity with Zlatan Ibrahimovic, while it continues to roll out its ‘Home’ line.

The H&M group is also investing via its innovation arm, called CO:LAB, through which it is forging partnerships and supporting start-ups, notably to test new business models and develop more sustainable solutions, as the group did for example with Fairbrics and Colorifix in 2022.

The resale market is on H&M’s priority list too. Sellpy, a Swedish second-hand resale site acquired by the group in 2019, has gradually expanded its presence in Europe, and is now active also in France. In 2022, Sellpy recorded a “sustained increase” in revenue, growing by 85%, and is aiming to reach SEK1billion in 2023, equivalent to approximately €90 million.

In terms of its retail footprint, the group intends to reach new markets in 2023. In H1, H&M will open its first store in Albania, and will launch its e-shop in Ecuador. COS will establish a presence in Mexico, Arket - which premiered in Paris in 2022 - will do so in Estonia, and & Other Stories will land in Australia. In total, the group is planning 100 store openings in 2023.

As well as being busy on expansion projects, H&M continues to streamline its organisation. Last year, it shut down no fewer than 427 stores, including 175 in Russia and Belarus. In 2023, a further 200 locations are set to be closed, while the group said it is also continuing to “renegotiate leases.”

H&M expects to achieve cost savings worth SEK2 billion in 2023, which ought to have “a positive effect on Q4 results.”

Helmersson said that sales in the first few weeks of fiscal 2023 have “started well,” growing 5% from December 1 to January 25 (and by 9% excluding the results of Russia, Belarus and Ukraine). She also expressed satisfaction at the fact that sourcing costs (fabrics, manufacturing, shipping, etc.) for orders placed so far this year are lower than those in the same period last year.

Helmersson admitted that “external factors remain a challenge,” but thinks that the outlook for this year is “very good.” According to her, 2023 will be a year of sales growth and improved profitability, thanks to the “investments and efficiency measures” deployed by the group. Meanwhile, the group’s 2024 target of achieving a double-digit operating margin has been confirmed.