A decrease in profits could lead to big clearance sales at H&M locations worldwide.
The Swedish clothing retailer H&M is obviously in the business of quick fashion, trends going up-going out, you get the gist. With that comes an expectation of quick turnarounds, except in cases where a company grows globally too fast. According to CNN, H&M's global unsold inventory is up 13%, a staggering number worth up to $4 billion or 36 billion Swedish kronor.
The unsold stock has contributed to a 28% decrease in global profits in the first half of 2018, with a noted financial analyst claiming, "The inventory issue has now developed into a significant problem for the company." Adam Cochrane believes the decrease in profit's generated could leave to massive in-store clearances and price slashes on marked goods. The company also has the option of selling its overstock to retailers in countries that don't have a strong H&M storefront presence.
H&M has said themselves that they will donate all unsold items to charity by season's end. Analysts believe H&M may choose a more aggressive approach, but it may come at the risk of hurting their brand image. Even though H&M is largely known as a discount brand, it would be wise to stay positioned where they are, unless the marketplace completely shifts to digital retail and quality goods.