Things aren't looking good for H&M. Despite markdowns, the clothing retailer just can't seem to get rid of its clothing. As The New York Times reports, the clothing retailer is stuck with $4.3 billion in unsold clothing and accessories.
The fast-fashion company's stock shares fell about 6.8 percent on Tuesday, which is their lowest level since 2005, The Washington Post reports.
“The rapid transformation of the fashion retail sector continues,” H&M chief executive Karl-Johan Persson said in a statement, the news source shares. “The start of the year has been tough. Weak sales combined with substantial markdowns had a significant negative impact on results in the first quarter.”
The Washington Post further explains that H&M's profits are down to their lowest level in 16 years, but their inventory is way up.
And it might be because H&M's fast-fashion model is growing old. There's more competition from similar companies, including Topshop, Uniqlo and ASOS, and customers are seemingly more interested in higher-quality and better-made clothing rather than cheaper items, Milton Pedraza, chief executive of the Luxury Institute, a New York-based market research firm, told The Washington Post.
“2018 is a transitional year for the H&M group, as we accelerate our transformation so that we can take advantage of the opportunities generated by rapid digitalization,” Persson said, CNBC reports.
Bloomberg reports that H&M “might” have e-commerce in place in all its markets by 2020, with the retailer beginning online sales in India this month.
Of course, the company's recent scandals haven't helped either. Earlier this year, the Weeknd announced that he would no longer be working with H&M after a racially offensive photo surfaced on the retailer’s website.
H&M responded in a statement, saying that they not only removed the image from their channels, but also from their retail offering. “We are deeply sorry that the picture was taken, and we also regret the actual print. Therefore, we have not only removed the image from our channels, but also the garment from our product offering globally,” the company shared.
“We will thoroughly investigate why this happened to prevent this type of mistake from happening again.”