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H&M surprised investors on Wednesday with a new CEO, Daniel Ervér, taking over with immediate effect as the Swedish fashion retailer struggles to boost sales in a fiercely competitive market.
Outgoing CEO Helena Helmersson said she had decided to leave the company after four years in the top job, adding the role has been 'very demanding at times for me personally'.
The leadership change came as H&M said sales for December and January fell by 4 per cent compared to the previous year, a bad sign for the key Christmas shopping period, reports Reuters.
The shares were down 9.8 per cent at 152 Swedish krone by 0815 GMT, set for their biggest single-day loss in nine months.
The world's second-biggest listed fashion retailer after Inditex, H&M is aiming to reach an operating margin of 10 per cent this year and has focused on profitability rather than sales volumes.
But it has struggled to compete with Inditex and low-priced fast fashion giant Shein, both of which have seen strong sales growth.
Ervér, 42, has been at H&M for 18 years, most recently as head of the retailer's core H&M brand, a role he will keep alongside the CEO job.
"We think there's a lot that needs to be done or could be done to turn around this business, and the question is whether or not a person who's been there for 18 years is the right person, or even has the mandate to take those steps," said Bernstein analyst William Woods.
H&M's fourth-quarter operating profit margin fell to 7.2 per cent from 7.8 per cent in the third quarter.
Measured in local currencies, sales from Dec. 1 to Jan. 29—the start of its fiscal first quarter—fell by 4 per cent, compared to an increase of 5 per cent in the same period last year.
Fourth-quarter operating profit was 4.33 billion crowns ($415.4 million), up from 821 million a year earlier but below the 4.57 billion expected by analysts in an LSEG poll.
The board of H&M proposed an unchanged dividend of 6.50 crowns per share, and said it would ask for authorisation to buy back the group's own B shares.
($1 = 10.4234 Swedish crowns)