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H&M mulling Zalando acquisition: Börsgolvet
Posted on Thursday, 11 January 2018 15:59
Swedish clothing retail chain Hennes & Mauritz (H&M) is being linked with a takeover of Berlin-headquartered peer Zalando, according to Börsgolvet.
Citing a source, the business gossip site said carrying out acquisitions could be one way of increasing sales, thereby addressing a decline in the prospective acquiror’s share price.
The person said that despite the fact that the two firms’ business models differ significantly from one another, a purchase could help to position the buyer effectively for what will be an uncertain future.
Despite this, as pointed out by Business Insider in its report on the situation, any deal would require Swedish investor Kinnevik’s sign off; the Stockholm-based firm holds a third of Zalando.
H&M’s value has steadily declined over the last few years; stock closed at SEK 160.80 on 10th January 2017, the last trading day prior to Börsgolvet’s article, compared to a close of SEK 253.60 on 2nd January 2017.
However, the firm’s value has been on the slide since 2015, according to the Financial Times (FT).
A particularly large drop occurred back in December; shares finished the day at SEK 200.30 on 14th December, before plummeting to close at SEK 174.30 on 15th.
This followed an announcement by H&M that its sales growth for the final quarter of last year had been significantly below expectations, noting that reduced footfall in its physical stores has impacted results.
The FT also cited the Internet as a large factor in the firm’s declining fortunes, noting that the group has yet to capitalise on the online sector effectively, despite having been an early adopter of online retailing.
Other issues have not helped; earlier this week H&M was forced to issue an apology over a “poorly-judged” product and image after an advertisement for a children’s sweater caused controversy and was judged as racist by many on social media.
This resulted in a number of celebrities, including the Weeknd and G-Eazy, ending their partnerships with H&M.
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