H&M has slashed the costs of some clothes to lower than $2 to compete with Shein, a Chinese e-commerce promoter that has boomed through the pandemic.
The Swedish fashion retailer is selling its ribbed crop tops for $1.70 – 70% off the regular price of $4.99.
Shein, whose bargain merchandise attracts more interest in times of soaring inflation, has gained traction with US buyers, pushing its valuation to $66 billion, according to The Wall Street Journal.
The company, which has drawn attention to allegedly unethical business and worker practices, recently raised $2 billion in its latest round of fundraising.
A 12 months ago, Shein, which generated about $23 billion in 2022, was expected to be value $100 billion, greater than the market capitalization of H&M and Zara combined.
H&M, meanwhile, has been cutting costs lately, closing a complete of 303 stores of its brands through the 12 months until May 31.
On Thursday, the company posted second-quarter earnings that beat estimates, sending shares up greater than 18%. They were up 1% on Friday to close at $3.39.
H&M has boosted sales in lots of markets despite limited consumer spending and “opposed” weather, chief executive Helena Helmersson said, adding that her summer collection got off to a very good start as temperatures in northern Europe rose.
Sales from June 1 to 27 were up 10% over the previous 12 months, a very good sign for the beginning of H&M’s third quarter.
H&M’s womenswear collection, in addition to the strong performance of the Cos and Arket brands, contributed to the rise in sales, said Helmersson.
The upper-than-expected profit helped investors digest a weaker margin of 8.2% for the second quarter, down from 9.2% a 12 months earlier.
H&M goals to achieve an operating margin of 10% by 2024.
H&M faces fierce competition from Shein in addition to one other controversial Chinese fast fashion retailer, Temu.
According to recent figures, Temu overtook Shein in US spending in May, reported Bloomberg News.
According to Bloomberg News, the Temu app was essentially the most downloaded and engaged app on Apple devices on most days this 12 months.
A congressional report published last week was harshly critical of Temu, which has been accused by lawmakers of failing to maintain “even the facade of a meaningful compliance program” that goals to prevent the sale of products produced by forced labor on its platform.
Within the report, a committee of the House of Representatives of the Communist Party of China said that Temu’s business model essentially allows the company to escape liability for complying with US law that blocks imports from China’s Xinjiang region unless corporations can prove the items were made without forced labour.
China has been accused of systemic and widespread mistreatment of Xinjiang’s ethnic and non secular minorities, specifically its predominantly Muslim Uyghur population. Beijing denies the allegations.
With Postal Wires