STOCKHOLM (Reuters) – H&M surprised investors on Wednesday by announcing the appointment of a new chief executive, Daniel Erver, with immediate effect, as the Swedish fashion retailer strives to boost sales in a fiercely competitive market.

The outgoing general director, Helena Helmersson, said she had decided to step down from her position and leave the group, explaining that her mission had been very difficult on a personal level.

On the Stockholm Stock Exchange, H&M plunged by more than 9% in the morning and dragged the entire European distribution sector (-1%) in its wake.

H&M, the world’s second largest fashion company behind Spain’s Inditex, is aiming for an operating margin of 10% this year by focusing on profitability rather than sales volume.

But it faces intense competition from Inditex, owner of Zara, and a price-sensitive clientele who are turning in particular to the Chinese group Shein.

H&M’s fourth-quarter operating profit margin fell to 7.2%, from 7.8% in the third quarter.

Sales, calculated in local currencies, fell 4% between December 1 and January 29 – the start of the first quarter of H&M’s fiscal year – compared with a 5% increase last year. .

Operating profit stood at 4.33 billion crowns (384.14 million euros), compared to 821 million a year earlier, while analysts surveyed by LSEG expected an average of 4.57 billion crowns.

The new general manager, Daniel Erver, has worked at H&M for 18 years and until now led the Swedish group’s flagship homonym brand. He will retain this function in addition to that of general manager.

“We think there are a lot of things that need to be done or could be done to turn this company around, and the question is whether someone who has been there for 18 years is the right person, or even if they have the mandate to take these measures,” observes William Woods, an analyst at Bernstein.

(Reporting by Marie Mannes in Stockholm and Helen Reid in London, by Dagmarah Mackos, edited by Claude Chendjou and Blandine Hénault)

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