H&M Has A Problem: $4.3 Billion In Unsold Clothes

by MR Magazine Staff

In the world of fashion retailing, where shopping is fast moving online and stores try to keep inventories closely matched to sales, even a small stack of unsold clothes can be a bad sign. What about a $4.3 billion pile of shirts, dresses and accessories? That is the problem facing H&M, the Swedish fashion retailer, which is struggling with a mounting stack of unsold inventory. H&M outlined the buildup in its latest quarterly report on Tuesday, prompting questions of whether the company is able to adapt to the fierce competition and changing consumer demands reshaping the global apparel market. Signs of its expanding unsold inventory began emerging last year, when it reported an unexpected quarterly drop in sales. The decline was the first in two decades, a period in which H&M expanded from a lone women’s wear store west of Stockholm to a gargantuan network of 4,700 stores around the world. Foot traffic in the past year fell as customers eschewed crowded shop floors in favor of online shopping, or lower-cost offerings elsewhere, a challenge hitting a wide array of “fast fashion” retailers. On Tuesday, the company said the pile of unsold stock had grown 7 percent in the past year and was now worth nearly 35 billion Swedish kronor. Read more at The New York Times.