Case Study Phase 1-3 Family Business Elin Bjornback
22  March  2013      

               

 

Table  of  Content    
 
H&M  –  SHORT  HISTORY  ...............................................................................................................................  1   H&M  –  BUSINESS  IDEA  AND  BRANDS  ......................................................................................................  1   H&M  –  FAMILY  AND  OWNERSHIP  .............................................................................................................  2   FUTURE  CONCERNS  .......................................................................................................................................  4   FOURTH  GENERATION  .......................................................................................................................................................  4  

 
LETTING  GO  .........................................................................................................................................................................  4  

   
OWNERSHIP  STRUCTURE  ..................................................................................................................................................  5  

BIBLIOGRAPHY  ...............................................................................................................................................  6   APPENDICES   .....................................................................................................................................................  7  

     

APPENDIX  1:  FAMILY  TREE  ..............................................................................................................................................  7  

 

(H&M  is  not  my  family  business  but  through  my  three  cousins,  the  third  generation,  I  have   strong  ties  to  the  business).      

H&M  –  Short  History  
    My   cousin   Karl-­‐Johan   Persson   has   been   the   CEO   of   the   Swedish   fashion   chain   H&M   since   2009  and  is  the  third  generation  to  be  involved  in  the  company.  His  father   Stefan   Persson     (my  godfather)  was  CEO  between  1982-­‐1997  and  has  since  1998  been  the  Chairman.       The   business   was   founded   in   1947   in   Sweden   by   entrepreneur   Erling   Persson   and   was   quickly  established  as  a  fashion  brand  across  the  country.  H&M  stands  for  Hennes  &  Mauritz   (hennes   means   “hers”   in   Swedish,   representing   the   main   target   market,   and   Mauritz   represent   the   male   attire   store   acquired   in   1950s   in   order   to   expand   further).   The   first   expansion   outside   Sweden   started   in   1964   when   opening   in   Oslo,   Norway.   The   business   went  public  in  1974  to  fund  further  expansion  plans.  H&M  is  today  the  second  largest  global   clothing  retailer,  after  Inditex,  with  2,800  stores  in  48  countries  with  a  total  number  of  staff   reaching  105,000  (H&M,  2013).    

H&M  –  Business  Idea  and  Brands    
    The   business   idea   of   the   company   is   to   provide   “fashion   and   quality   at   the   best  

price”,  selling  clothes,  shoes,  accessories  and  beauty  products  for  women,  men,  teens  and  
children.   The   clothing   lines   are   very   diverse,   including   everything   from   basics   to   party   attire.   In   addition   to   clothing,   H&M   offers   interior   fashion   through   H&M   Home,   often   incorporated     1  

within  the  usual  stores.  In  2004,  H&M  became  more  recognizable  through  the  new  concept   of  introducing  a  new  designer  collaboration  each  year.  Unique  and  creative  clothing  lines  has   since   then   been   especially   designed   by,   for   example,   Karl   Lagerfeld,   Stella   McCartney,   Roberto  Cavalli,  Matthew  Williamson  and  Versace  (H&M,  2013).     H&M   is   also   the   mother   company   several   fashion   brands.   The   more   upscale   fashion   chain   COS  (Collection  of  Style),  which  was  founded  by  my  cousin  as  his  first  project  for  the  H&M   Group.   COS   is   today   present   in   15   countries.   Other   brands   include   Weekday,   Monki   and   Cheap   Monday,   which   all   have   their   own   stores.   In   March   this   year,   H&M:s   latest   development  &  Other  Stories  was  launched  (H&M,  2013).    

H&M  –  Family  and  Ownership    
  H&M  became  public  in  1974  in  order  to  fund  the  future  expansion.  In  Sweden,  there  are  two   types   of   shares   in   the   market,   A-­‐   and   B   shares.   The   A-­‐share   gives   the   owner   the   right   to   more  votes.  In  most  of  the  cases,  the  B-­‐share  represents  only  1/10  as  many  shares  as  an  A-­‐ share.   The   H&M   share   (B-­‐share)   is   traded   on   the   OMX   Nordic   Exchange   Stockholm,   Sweden.     The   H&M   share   capital   consists   of   194,400,000   A-­‐shares   (10   votes   per   share)   and   1,460,672,000   B-­‐shares   (1   vote   per   share).   The   total   number   of   shares   is   1,655,072,000.     Already   in   the   80s,   the   founder   Erling   Persson   allocated   his   shares   in   H&M   between   his   three  children,  two  daughters  and  son  Stefan   Persson.  Even  if  the  daughters  received  shares   it   was   Stefan   who   received   the   majority.   The   two   daughters   were   instead   given   exclusive   properties   around   Stockholm,   Sweden.   I   believe   this   decision   was   made   because   both   Erling  

 

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and  his  children  knew  that  if  H&M  was  to  be  part  of  the  Persson  Family  in  the  future  and   avoid  difficulties,  only  one  child  could  be  the  majority  owner  of  the  votes.       Currently,   Stefan  Persson  and  his  three  children  are  the  majority  owners  of  H&M  and  have   37.7%  of  the  total  shares  (including  all  available  A-­‐shares)  and  69.7%  of  the  total  votes,  while   his   sister   Lottie  Tham   and   her   family   is   the   second   largest   (please   see   the   10   largest   owners   in   the   chart   below).   Stefan   Persson   and   his   three   children   have   collected   their   shares   in   a   company  called  Ramsbury  Invest  AB.  When  it  comes  to  managing  the  ownership,  the  family   is   considered   to   be   using   “professionalism”   (Berent-­‐Braun,   and   Uhlaner,   2012),   by   not   interfearing  with  the  business  and  always  put  the  interest  of  H&M  and  other  shareholders   first.  
 

 
(Ownership  Structure  H&M,  taken  from  hm.com)  

 

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Future  Concerns  
 

Fourth  Generation  
  From  the  start  in  1947  there  has  always  been  one  family  member  actively  working  in  H&M,   but  will  it  be  in  the  future?  The  fourth  generation  is  all  under  10  years  old  today  so  it  is  an   issue  for  the  long-­‐term  but  should  be  considered.  Knowing  my  cousin,  he  would  never  push   his   children   into   H&M   just   because   it   is   their   family   business   and   legacy.   But   at   the   same   time   it   would   be   quite   sad   to   see   no   member   of   the   founding   family   involved.   So,   should   he   “push”  his  children  into  H&M  or  just  accept  that  the  family  might  not  be  actively  managing  it   in  the  future?  Or  is  there  a  way  in  between?      

Letting  Go  
  Trust  is  considered  to  be  one  of  the  most  important  factors  for  a  successful  succession  (Filser   et   al,   2013).   For   how   long   will   my   godfather   Stefan   Persson   remain   as   the   Chairman   of   H&M?  He  has  held  this  position  since  1998  and  shows  no  sign  of  letting  go.  To  work  as  CEO   in   a   business   where   your   father   is   the   Chairman   is   not   an   easy   task.   Since   H&M   is   a   well   performing  business  the  relationship  between  father  and  son  seems  to  be  healthy,  but  what   can  be  done  to  keep  it  positive  and  that  no  tensions  arise  that  would  have  a  negative  impact   on  business  performance?                   4  

Ownership  Structure    
  Another  concern,  the  main  one,  is  what  will  happen  with  the  ownership.  When  my  godfather   Stefan  Persson  is  not  around  anymore,  how  will  the  A-­‐shares  be  allocated?  Will  my  cousins   agree   on   letting   one   of   them   be   the   majority   owner   and   in   control   of   the   votes?   My   godfather  and  my  cousins  might  already  have  solved  this  issue,  I  do  not  know.    One  thing  is   for   certain,   not   all   three   children   and   their   children   will   be   able   to   control   everything   together,   it   will   be   too   divided   and   there   is   a   greater   risk   for   the   family   to   loose   H&M.   What   should  the  family  consider  when  determining  future  ownership?
                                 

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Bibliography  
 

Berent-­‐Braun,  M.  and  Uhlaner,  L.  (2012).  ‘Responsible  ownership  behaviors  and  financial   performance  in  family  owned  businesses’  Journal  of  Small  Business  and  Enterprise   Development,  19(1),  pp.  20-­‐38.  Emerald  Group  Publishing  Limited  (online).  Available  at:   http://www.emeraldinsight.com/journals.htm?issn=1462-­‐ 6004&volume=19&issue=1&articleid=17015652&show=abstract     Filser,  M  et  al.  (2013).  ‘Psychological  Aspects  of  Succession  in  Family  Business  Management’   Management  Research  Review,  36(3).  Emerald  Group  Publishing  Limited  (online).  Available   at:  http://www.emeraldinsight.com/journals.htm?articleid=17075259     H&M.  (2013).  About  H&M.   Available  URL:  http://about.hm.com/content/hm/AboutSection/sv/About.html     H&M.  (2013).  Full  Year  Report  2012.   Available  URL:  http://about.hm.com/content/hm/AboutSection/en/About/Investor-­‐ Relations/Financial-­‐Reports/Financial-­‐Reports.html#cm-­‐menu                                       6  

Appendices  
 

Appendix  1:  Family  Tree    
        Erling  Persson   Founder    

  Daughter  I   (deseased,  two  sons  not   working  in  the  business)  

  Stefan  Persson   Chairman   (3  children,  only  one   working  in  the  business)  

  Daughter  II   (3  children,  none  working   in  the  business)  

  Karl-­‐Johan  Persson   CEO   (2  young  children)  

 

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