According to The New York Times, H&M is sitting on $4.3 billion worth of unsold inventory – and no matter how much they mark it down, no one seems to want it.
“H&M outlined the [$4.3 billion] buildup in its latest quarterly report on Tuesday,” the Times reported, “prompting questions of whether the company is able to adapt to the fierce competition and changing consumer demands reshaping the global apparel market.”
(For some perspective: there are 36 countries with expected 2018 GDP’s of less than $4.3 billion.)
This is just more bad news in an already bad year for the company. In the first quarter of 2018, the company’s “operating profit fell 62 percent,” while their “pile of unsold stock had grown 7 percent,” numbers that caused H&M’s stock to tumble to its “lowest closing price since 2005 on the Stockholm stock exchange.”
And because fast fashion’s success hinges upon delivering an obscene amount of rapidly produced goods to market as quickly as possible, the “buildup” isn’t going to be easy to work through. “[H&M] produces hundreds of millions of items each year,” the Times said, also noting that “there are so many that a power plant in Vasteras, the town where H&M founded its first store, relies partly on burning defective products the retailer cannot sell to create energy.”
While CEO Karl-Johan Persson passed the problem off on preparation efforts for a physical and online expansion, the Times said that critics, “blamed poor inventory management and underwhelming product offerings,” factors they say caused shoppers to go elsewhere, and that led one analyst to call the mega-retailer, a “slow-motion wreck.”
You can read more about it at The New York Times.