While the fashion giant may have debuted some high-profile collaborations last fall with Erdem and Nicki Minaj, H&M is fessing up to sitting on a stockpile of unsold dresses and accessories worth $4.3 billion.
In addition to that, The New York Times reports that the retailer has seen a 62 percent drop in profits in the three months through February of this year.
And while this may be bad news for H&M, who also owns Cos and & Other Stories, it’s great news for consumers since the retailer has to plans to significantly drop prices in the next upcoming months to help eliminate the stockpile.
Note: The Washington Post reports that included in the inventory are months-old Halloween costumes and Christmas sweaters.
In addition to slashing prices, H&M also has intentions of cutting back on the opening of new store locations.
Instead, the retailer will focus their efforts on expanding their online presence by 25 percent this year.
But this might not be enough to fix the problems the retailer is facing as The New York Times reports that financial analysts claim H&M to be “a slow-motion wreck” after taking a look at the company’s first-quarter results.
Milton Pedraza, CEO of New York-based market research firm Luxury Institute, tells the Washington Post that part of the problem is that the millennial consumer base is starting to opt for better quality instead of cheap “throwaway products.”
Pedraza notes that millennials are more interested in “classic and quality, neither of which H&M has been able to deliver.”
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