image: H&M

image: H&M

H&M cannot keep up with its rivals. The Swedish fashion group announced on Monday that it will stop posting monthly sales figures in light of continuing sales declines, and instead, will start holding seasonal or quarterly capital market days, a bad sign according to industry analysts. After decades of strong growth, sales at the world’s second-biggest fashion retailer have slowed over the past couple of years amid tougher competition from similarly situated retailers, including its closest rival, Zara.

“A month is far too short a period over which to assess how sales are developing,” H&M said in a statement. The Swedish giant – which boasts the title of the second largest global clothing retailer, just behind Spain-based Inditex (parent company of Zara) – has published monthly sales data for more than a decade.

“This shows how frustrated they are that the market has lost confidence in the company. The fundamental problem is not monthly data, it’s the company’s weak development,” a fund manager who declined to be identified told Reuters. “Monthly data was not a problem when the company performed well. Why should it be now?” 

H&M shares have been on a downward slope since 2015, underperforming the market and especially bigger rival Zara, with the shares falling 18 percent in the past year alone.

Zara – which boasts more sophisticated designs and quality of goods, as well as a more successful supply chain than its closest rivals, including. The Spanish fast fashion giant, one of the few brands that posts near-consistent growth during each fiscal quarter, has undergone something of a more high fashion-focused makeover in recent years. Its ad campaigns, in particular, have taken a noticeable turn.

H&M certainly cannot compete with Zara’s supply chain. The company’s business model depends on a rapid runway-to-retail timeline (thanks to centralized manufacturing), quick turnover (largely due to the fact that it produces only small quantities of garments and accessories), and a sophisticated forecasting system (which enables the brand to make only the most desirable items for their shoppers before these shoppers even know they want these things). 

This is, of course, yet another way that the retail giant is outperforming its competitors. As Masoud Golsorkhi, the editor of Tank magazine, said a few years ago, “With Zara, you know that if you don’t buy [a product], right then and there, within 11 days the entire stock will change. You buy it now or never.” There certainly is not the same urgency with H&M with consistently struggles with overstocking its garments and accessories, and having to implement large-scale sales after the fact.