h&m buys cheap monday

[hermes]

interesting from businessweek dated 6 March 2008


H&M buys Cheap Monday jeans maker

STOCKHOLM, Sweden

Fashion retailer Hennes & Mauritz AB said Thursday it has signed a deal to buy privately owned Swedish fashion company Fabric Scandinavien AB, maker of Cheap Monday jeans.

H&M said it has bought a 60 percent stake in Fabric Scandinavien for 564 million kronor ($92 million) from the founders of the company, Adam Friberg, Lars Karlsson, Orjan Andersson and Linda Friberg. It also has the possibility to acquire the remaining stake within three to five years.

Apart from designing Cheap Monday jeans, Fabric Scandinavien also runs the store chains Weekday and Monki in Sweden.

Weekday is an urban unisex concept with a total of six stores, while Monki's 12 stores are aimed at young women.

With their punk-rock style, trendy tight fit and affordable price, Cheap Monday jeans have become a hot commodity in recent years and are now sold in more than 1,000 stores globally.

H&M said the company will be run as a stand alone subsidiary within the H&M Group.

In the financial year ended 2007, Fabric Scandinavien had revenue of 250 million kronor ($41 million) and an operating profit of 67 million kronor ($11 million).

H&M said it expects revenue for 2008 to reach about 400 million kronor ($65 million).

"We have been impressed by Fabric Scandinavien's development for a long time and we see a potential to develop stores and concepts in other markets. By working together we can accelerate the growth further. We can also do it in a more efficient manner by drawing on H&M's experience and knowledge of, for example, production, logistics and establishment," H&M Chief Executive Rolf Eriksen said.

 

[crush]

and another small one gets swallowed

 

[spoonman]

Sellouts.

 

[crush]

also, look at the numbers:

2007: 41 million revenue(with a remarkable 11 mil profit)
2008: should reach 65 million

more than 50% up in 1 year?

 

[robbie]

so i wonder if UO will stop selling CM?

 

[onion]

Maybe with all the money they make from this they can finally open a web store for America!!

 

[BrettChaotix]

seriously! They spend $91mil on Cheap Monday and can't invest the less than 1% of that needed for expanding the web store to the states?

 

[robin]

That's quite a bit money for just a stake of Cheap Monday - I wouldn't have thought that they'd be worth that much.

Originally Posted by BrettChaotix

seriously! They spend $91mil on Cheap Monday and can't invest the less than 1% of that needed for expanding the web store to the states?
It would take more than one million for a company like H&M to run a successful online store.

 

[ww90]

was never a fan of cheap monday

 

[spoonman]

I guess Cheap Monday isn't so cheap.

 

[smw356]

Originally Posted by robin

It would take more than one million for a company like H&M to run a successful online store.
true, but its just untapped profit that they are ignoring.

 

[robin]

Originally Posted by smw356

true, but its just untapped profit that they are ignoring.
It would not be profitable at all for them right now. They only have a tiny bit of market share in the U.S., and they need to continue putting their money into retail growth.

 

[chronoaug]

Robin is correct. As big as h&m is here among fashion forums, but most people don't know about it. Same with Uniqlo. Don't they both offer online shopping overseas? Hopefully, while i'm still young they'll grow to the point where they'd make good money going online here in the states.


Cheap Monday jeans are already popping up in every store that sells clothes to relatively young people. I can't imagine how many more will carry them in the next year.

 

[BrettChaotix]

Originally Posted by robin

It would take more than one million for a company like H&M to run a successful online store.
YOu are right, it would but they already have a sucessful online store established. All they need to do is add the functionality to make it available to the USA which isn't nearly as large of a project.

Originally Posted by chronoaug

Robin is correct. As big as h&m is here among fashion forums, but most people don't know about it. Same with Uniqlo. Don't they both offer online shopping overseas? Hopefully, while i'm still young they'll grow to the point where they'd make good money going online here in the states.
I dunno, H&M is already in half the malls on both coasts and probably ever major metro area in the Midwest. I wouldn't want to wait for them to become as prevalent as Target before I can place an online order for a tshirt.

 

[hi-val]

Online retailing also requires distribution centers in many parts of the country. You'd need to set up an almost completely separate distribution system compared to distro -> retail because you're handling lots of small orders, posting them, etc. It requires having millions of dollars of inventory in a warehouse as well.

(I used to work in an auto parts warehouse, I have a general sense of how it goes)