The last time we checked in with H&M, the retailer was sitting on over $4.3 billion of unsold inventory. Well, according to a pair of recent stories at Racked and Reuters, that mountain of deadstock is doing some serious damage to the company’s once-unflappable bottom line.
“H&M plans to cut prices further as supply problems hamper the Swedish company’s ability to respond to fast-changing fashion demand, swelling its stockpiles of unsold clothing,” Reuters said, while Racked added that the company “reported that profits have declined 21 percent.”
“The company believes these cuts will appeal to shoppers already looking for steep discounts, and will simultaneously help it get rid of the inventory problem.”
Regardless if the markdowns trigger sales, however, the company’s supply chain will still be a problem for the brand going forward (and not just because it’s an eco / ethical disaster). “H&M’s price-slashing strategy might help it get rid of a pile or two of pants and tees,” Racked writes, “[but] its design and business strategy has actually slowed in comparison to competitors,” and as Asos and Boohoo have shortened their turnaround time to weeks, H&M still “runs much of its production cycle on a six-month schedule.”
“[H&M’s supply] chain is becoming irrelevant because warp-speed, low-priced clothing is now ubiquitous and sales have moved online” one analyst told Racked. “H&M, the founder of fast fashion, is now too slow.”
