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H&M broadens trendy clothing range to attract shoppers

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CEO Erver says value for money crucial for cautious

consumers

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Star-studded marketing campaign aimed at boosting H&M

brand

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H&M shares fell after it scrapped 2024 margin target

By Helen Reid and Marie Mannes

STOCKHOLM, Sept 26 (Reuters) - Swedish fashion retailer

H&M is banking on lower prices and a wider range of

trendy clothing compared to basics to drive sales among cautious

consumers in the crucial shopping months leading up to the end

of the year.

Shoppers are already starting to browse for holiday items

and H&M recently launched its homeware collection for the

holiday season, CEO Daniel Erver said, adding that value for

money will be critical as households are still under financial

pressure.

H&M is the first global retailer to offer insights into its

outlook for the upcoming holiday shopping season, a critical

sales driver for the sector.

"We see a high search interest, actually, in holiday

(products) already now," Erver told Reuters in an interview,

referring to online search trends.

He was speaking after the retailer ditched its hope for a

10% operating margin this year and reported weaker than expected

third-quarter profit, but said it sees sales for September - the

first month of its fourth quarter - jumping 11% compared to a

year ago.

While H&M sells many cheap evergreen basics like $19.99

jeans and $7.99 T-shirts, Erver said it is shifting to a bigger

share of trendy pieces that people will buy no matter the

weather.

"Where we are shifting and doing the biggest leap is

updating the assortment to make it more relevant, to make it in

current fashion, updated aesthetics, that's where we're

performing the best and that's also the least

weather-dependent," he said.

CELEBRITY APPEAL

Shiny leather dresses with silver studs, knee-high boots,

and mohair tops and skirts embellished with rhinestones all

featured prominently in H&M's autumn/winter collection modelled

by pop star Charli XCX, who performed at H&M's London Fashion

Week launch two weeks ago, and supermodel Kate Moss' daughter

Lila Moss, among other celebrities.

A fluffy leopard print coat worn by Charli XCX in the

advertising campaigns sold out in minutes, Erver told Reuters.

He is betting that star power will boost H&M's brand and justify

the marketing splurge that is part of his turnaround strategy.

"The focus on fashionability, brand heat and activating

collections with collaborations has always been probably the

strongest piece of H&M's business, and basics have just become

more and more competitive," said Deutsche Bank Research analyst

Adam Cochrane.

Increasing marketing spending is "100% the right thing to do

to reignite the H&M brand", Cochrane added.

H&M will still have to use discounts to lure cash-strapped

shoppers, though, and on H&M's U.S. website many of the items in

the autumn/winter collection were marked down between 15% and

42%. A burgundy synthetic leather skirt, slashed to $10.49 from

$17.99, showed as sold out.

Overall U.S retail sales growth is expected to be muted

during the holidays as prudent shoppers hold out for the best

bargains, industry experts predict.

North America is a "more challenged" region for consumer

demand, Erver said.