Report: H&M is feeling the fallout from an accumulation of unsold merchandise
Amid declining profits, H&M does have a surplus in one area — inventory.
The company is increasing markdowns this quarter after accumulating a record pile of unsold garments worth more than $4 billion, according to Bloomberg.
The company’s operating profit fell 62% to its lowest level in more than a decade. This was due to unseasonably warm European weather in January followed by February’s cold snap. When clearance sales failed to reduce quantities of T-shirts and jeans that customers had passed over, the company slash prices even more, to no avail, according to the report.
CEO Karl-Johan Persson said in the report that the company made mistakes by narrowing its assortment last year, though he expects sales to improve in the second half.
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