H&M founding family builds stake as turnaround struggles to gain traction

By Greta Rosen Fondahn and Helen Reid

STOCKHOLM/LONDON, Sept 23 (Reuters) - The billionaire family behind H&M is quietly increasing its stake, fuelling speculation it could take the fast-fashion retailer private as CEO Daniel Erver's turnaround efforts have so far failed to boost the shares or lift sales significantly.

The Persson family's Ramsbury Invest holding company, primarily owned by Sweden's richest person Stefan Persson, has bought 36.8 million H&M shares so far this year, regulatory filings show. Stefan Persson is the son of H&M founder Erling Persson and the father of chairman Karl-Johan Persson.

The family and related entities owned more than 68% of H&M's shares at the end of August, according to the company's website, up from 49.5% at the start of 2021.

"It is very difficult to view it any other way than that their strategy is to slowly buy out the company," said Sverre Linton, chief legal officer of the Swedish Shareholders' Association, which represents small shareholders. "You could call it Sweden's slowest buyout."

Under Swedish rules, shareholders who own 90% of a company can compel the purchase of the remaining shares.

Minority shareholders would be best served either by a successful turnaround that lifts H&M's share price or by a "decent" cash offer from the Persson family, Linton said. "I believe there are many shareholders who would be willing to accept such an offer at this stage."

Deutsche Bank analyst Adam Cochrane expects the family to take H&M private by 2030.

H&M referred questions about the share purchases to Ramsbury Invest, where a spokesperson declined to comment on any plans to take the company private, saying only: "The Persson family believes in the company, are long-term owners and have historically increased their ownership over time."

STUCK IN THE MIDDLE

H&M has struggled to lift sales as shoppers have cut back on spending and competition has intensified from ultra-cheap online retailers such as Shein and from Zara owner Inditex. The stock has lost more than 50% of its value since peaking in 2015.

Erver took over as CEO in January 2024 with a mandate to improve profitability and strengthen the brand, but has yet to reignite sales growth.

Sales fell 1% in the first quarter and were flat in the second. Analysts expect only modest growth in the third quarter, which H&M reports on Thursday.

"Maybe the family feels that they get so much negative feedback from the markets, it's better for them to just be outside the market and then they can go ahead with much more long-term strategies," said Peter Magnusson, a portfolio manager at Cicero Fonder in Stockholm, who also expects the Perssons to take H&M private.

(Reporting by Greta Rosen Fondahn in Stockholm and Helen Reid in London. Editing by Mark Potter)