H&M CEO Karl-Johan Persson has conceded that the global fashion retailer has made “mistakes” in its strategy, after it reported a 34 per cent decline in pre-tax profits for the three months to November 2017.

Under intensifying pressure from shareholders following a similarly disappointing trading update in October last year, Persson signalled even more store closures as the global retailer continues its shift towards ecommerce.

It expects to close 170 stores in 2018 and open 390 new ones around the world, the largest number of store closures for the traditionally fast-expanding brand since the turn of the 21^st century.

H&M’s global sales increased by 4 per cent for the full-year to 30 November 17, while net profit increased slightly to $327 million.

Fourth quarter sales decreased by 4 per cent to $920 million though, while profits plummeted to $76.6 million.

“All in all, we feel 2017 was a year where we made more steps forward and did more groundwork for the future, but we have also made some mistakes that have slowed us down,” Persson admitted.

“The industry changes are challenging everyone, and this will continue in 2018. The new fashion landscape requires skills and resources to adapt and seize the new opportunities.

“In particular the ability to take a long-term view and to navigate through some inevitable turbulence. By long-term investments, we have built a solid platform for many years of continued growth,” he continued.

H&M signalled its intention to develop new brands for emerging segments, with a ninth brand, Afound soon to launch as an off-price marketplace that will sell well known fashion and lifestyle brands.

The first store will be located in Stockholm, Sweden alongside a digital marketplace.

H&M is also investing heavily in accelerating its digital strategy, broadening its online assortment, and rolling out digital to new markets like China through a partnership with Tmall.

Persson went on to elaborate, in detail, about the year that was for the fashion giant outlining a three-pronged strategy for the future that includes innovating in its core business and investing in new technology to drive growth in traditional and new channels.

“The fashion industry is changing fast. At the heart of the transformation is digitalization and it is driving the need to transform and re-think faster and faster. This is presenting many challenges, but we believe we are well-placed to adjust to the new dynamics and take advantage of the opportunities in front of us,” he said.

“Part of this opportunity is to do with the size of the market. While the H&M group is a big player, our market share is still relatively small. It is also a growing market. So, while the H&M group has come a long way, we are most excited by the distance we still have to go and our fitness for the opportunities ahead.

“Our performance during 2017 was mixed, with progress in some areas but also difficulties in others. We delivered growth of 3 percent in 2017 which is clearly below our expectations.

“In the fourth quarter our sales overall decreased by 2 percent in local currencies. Our online sales and our newer brands performed well but the weakness was in H&M’s physical stores where the changes in customer behaviour are being felt most strongly and footfall has reduced with more sales online. In addition, some imbalances in certain aspects of the H&M brand’s assortment and composition also contributed to this weaker result.

“But our performance does need to be seen in the wider context of the transformation that the industry is going through. Underneath the disappointing recent performance, we see reasons for optimism and good learnings but we need to accelerate the transformation even more,” he continued.