H&M to test selling external brands in strategy shift

STOCKHOLM (Reuters) - Sweden's H&M HMb.ST said on Monday its budget fashion chain H&M, which accounts for the bulk of group sales, would test selling external brands and products.

FILE PHOTO: An H&M sign is seen at the entrance to an H&M store in Palma on the island of Mallorca, Spain June 14, 2019. REUTERS/Anna Ringstrom/File Photo

Some of the group’s newer, smaller brands such as & Other Stories and Arket, already market a selection of external brands in addition to their own products.

A move in the same direction for the 72-year-old core brand would be a significant strategy shift and a possible step towards competing directly with multi-brand online retailers such as Germany's Zalando ZALG.DE and Britain's ASOS ASOS.L.

A company spokesman said complementing the H&M brand with external brands would hopefully attract new shoppers, declining to give more details about the trial.

The world's second-biggest fashion retailer after Zara owner Inidtex ITX.MC has seen profits drop for three straight years, due to slowing sales at its core brand's physical stores.

H&M earlier on Monday reported an 8% rise in third-quarter sales, measured in local currencies. Investor concerns that it is not yet back on track however weighed on its shares.

Its external brand trial was first reported by Swedish online news site which referred to a job ad on H&M’s website.

“The H&M brand will now develop our offer of external brands. The purpose is to complement our offer with external brands to add excitement and energy and we see great opportunities for growth and to find new customers,” H&M said.

“We have set a first vision on what we would like to do – now we will set the plan on how to test and scale this for H&M,” it said in the job ad.

Other high-street clothing retailers that have started to sell other brands include Britain's Next plc NXT.L which has evolved its website over the past decade from a single brand site to an aggregator of clothing, footwear and homewares from different providers.

Reporting by Anna Ringstrom, additional reporting by Sonya Dowsett; Ediitng by Angus MacSwan and Emelia Sithole-Matarise