H&M's Reinvention Under the Persson Family: A Strategic Shift with Long-Term Potential

The Persson family, founders of H&M, have long been the quiet architects of one of the world's most recognizable fashion brands. Now, through a deliberate consolidation of ownership and governance, they are positioning H&M for a new chapter—one that could redefine its role in an increasingly fragmented retail landscape. With voting control nearing 83% and a recent leadership overhaul, the family's grip on strategy is tighter than ever. But does this shift toward private ownership bode well for investors? The answer lies in balancing the agility of centralized decision-making with the risks of reduced public accountability.

The Persson Family's Ironclad Hold on H&M

The Persson dynasty's influence dates back to Sture Persson, who founded H&M in 1947. Today, his descendants wield unparalleled control through Ramsbury Invest AB, their holding company. As of April 2025, their ownership stake in H&M's capital reached 63.4%, while their voting power surged to 82.5% due to the dual-share class structure: Class A shares carry ten votes each, a mechanism that has insulated the family from external influence.

Recent governance changes underscore their determination to solidify control. At H&M's 2025 Annual General Meeting (AGM), the board re-elected Karl-Johan Persson as chairman and added Klas Balkow, a seasoned financial executive, to the board. The AGM also approved the LTIP 2025, a long-term incentive program for senior leaders, tied to performance metrics like digital sales growth and debt reduction. This signals a clear alignment of management incentives with the family's strategic priorities.

Operational Agility in a Disrupted Retail Sector

The Perssons' centralized control could be a double-edged sword, but in an industry where speed and decisiveness matter, it offers distinct advantages. Consider the leadership transition: Helena Helmersson's departure as CEO—citing the role's personal demands—was swiftly addressed by appointing Daniel Ervér, former head of the H&M brand. Ervér's hands-on operational experience contrasts with Helmersson's focus on sustainability and long-term goals, suggesting a pivot toward execution over experimentation.

This shift aligns with the family's stated priorities: reducing debt, reviving stagnant sales, and accelerating digital transformation. H&M's net debt has fallen by 25% since 2021, and the AGM's authorization to repurchase up to 10% of shares could further strengthen liquidity. Meanwhile, the LTIP 2025 ties executive rewards to metrics like e-commerce growth, a clear nod to the need for faster online adoption.

Risks of Centralized Control

The family's dominance raises valid concerns. Reduced public accountability could lead to short-termism or resistance to innovation. Investors in family-led firms often question transparency, governance, and the ability to attract diverse talent. Compare this to Zara's Inditex, where decentralized decision-making at store level has fueled agility. H&M's centralized structure may struggle to replicate such responsiveness.

Moreover, the market's skepticism toward family-controlled companies is well-documented. A 2024 study by McKinsey noted that such firms underperform peers by 15% over five years due to governance gaps. H&M's recent sales slump—a 4% drop in early 2024—has already tested investor patience, with shares down 13% since late 2023.

Valuation Triggers for Long-Term Investors

Despite risks, H&M offers a compelling long-term narrative if the Perssons deliver on their promises. Key triggers to watch:
1. Debt Reduction: A net-debt-to-EBITDA ratio below 1.5x by 2026 would signal financial discipline.
2. Digital Success: E-commerce sales should grow to 30% of total revenue (from 24% in 2024), driven by app improvements and AI-driven personalization.
3. Store Optimization: Closing underperforming locations and focusing on high-margin markets like the Nordics and Asia could boost margins to 8% (from 6.5% in 2024).

At current valuations—trading at 12x 2025E earnings—H&M is undervalued relative to its peers (Inditex trades at 16x). A successful turnaround could unlock 20% upside over three years.

Investment Thesis: Buy with a Three-Year Horizon

The Persson family's consolidation of control is a strategic move, not a retreat. Their track record—navigating the 2008 crisis and transitioning H&M from a discount retailer to a sustainable-fashion pioneer—suggests they can adapt again. While risks like governance opacity linger, the current stock price reflects pessimism about H&M's ability to reinvent itself.

Investors with a three-year view should consider H&M a contrarian play. The LTIP 2025 aligns management with shareholder interests, and the shift toward operational rigor under Ervér could stabilize sales. If debt declines and digital initiatives gain traction, the stock could rebound sharply.

Rating: Buy
Price Target: SEK 180 (15% upside from June 2025 levels)
Time Horizon: 3 years

H&M's future hinges on whether the Perssons can blend their historic vision with modern retail realities. For now, the ingredients for a comeback—debt reduction, a renewed focus on execution, and an underappreciated brand—are in place. The family's grip on control may be the very tool needed to make it happen.