Persson, Stefan

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Stefan Persson

Executive

Born October 4, 1947, in Stockholm, Sweden; son of Erling (an entrepreneur) and Margrit Persson.

Addresses:

Office—Hennes & Mauritz AB, Box 1421, Stockholm S–111, Sweden.

Career

Joined Hennes & Mauritz AB, Stockholm, Sweden, 1972; board chair, 1979—; served as chief executive officer, 1982–98. Also serves on the boards of the Stockholm School of Entrepreneurship, Electrolux and INGKA Holding B.V.

Awards:

International Award, (U.S.) National Retail Federation, 2000.

Sidelights

Stefan Persson chairs the hugely successful clothing retailer Hennes & Mauritz AB, a company founded by his father in Sweden in 1947. Known informally as "H&M," the international chain of nearly 900 stores has mastered the art of delivering cheap but chic styles and is poised to corner this segment of the United States market. Ranked Sweden's richest private citizen, Persson is widely credited with taking the company global when he succeeded his father as chief executive officer in 1982. BusinessWeek writers Kerry Capell and Gerry Khermouch described H&M's successful strategy in a 2002 company profile: "Treat fashion as if it were perishable produce: Keep it fresh, and keep it moving," they wrote. "That means spotting the trends even before the trendoids do, turning the ideas into affordable clothes, and making the apparel fly off the racks."

Persson was born the same year, 1947, as H&M. His father, Erling, was the son of a butcher in Västerås, an hour or so outside of Stockholm. An entrepreneur, the senior Persson traveled to New York City just after World War II and was impressed by large department stores like Macy's and the range of women's apparel they offered. Returning to Västerås, he opened a women's clothing store, Hennes ("hers" in Swedish), which offered inexpensive but stylish apparel. It proved a hit with locals, and was soon able to open a Stockholm store, where lines around the block formed on its first day of business. "The idea of providing such garments for the average woman fitted in well with the egalitarian mood of post–war Sweden," noted Financial Times writer Nicholas George, who wrote that the Scandinavian country's thriving economy helped make it rise quickly to the list of the world's most affluent nations. "It is often said that if Per–Albin Hansson, the legendary Social Democratic leader, created Sweden's 'people's home' with welfare and security, Ingvar Kamprad, founder of Ikea, furnished it and Erling Persson clothed it."

The Hennes company became "H&M" in 1968 when it bought Mauritz Widforss, a Swedish hunting and gun retailer, which gave them a men's clothing line. By then, it had cautiously ventured abroad, opening stores in Norway and Denmark. Persson joined his father's company in 1972, and helped out at the launch of H&M's first London store four years later by standing outside and handing out ABBA records as a promotional stunt. He became board chair in 1979, with his father remaining chief executive officer (CEO), and began to accelerate the expansion process soon afterward. The company moved into West Germany in 1980, and by 1985 had 200 stores across the continent and in the United Kingdom. "All over northern Europe, frumpy department stores with sluggish centralised buying processes found themselves out–thought and outsold by the new arrival," noted a writer for London's Independent newspaper, Darius Sanai.

In 1982, Persson took the chief executive job when his father retired. H&M continued its expansion, and a period of almost exponential growth followed. Listed on the Stockholm Stock Exchange since 1974—a move made in part to avoid paying Sweden's onerous inheritance taxes—H&M shares steadily increased in value as the company posted growth rates of an astonishing 25 percent annually for a number of years. It launched children's and maternity lines in its stores, and by the late 1990s had bested competitors to become Europe's largest apparel retailer. At one point in early 2000, H&M shares were considered by some financial analysts to be the world's most highly valued stock in the retail sector. That stellar reputation plummeted a little a few months later, when Fabian Mansson, a thirty–ish former skateboard champion and chief executive officer to whom Persson had handed over his CEO title in 1998, suddenly departed. Persson, who served as board chair, and his directors then chose Rolf Eriksen, a company veteran, to replace Mansson, and returned to a more pressing concern—the launch of H&M's first United States store, "the traditional graveyard for ambitious European manufacturers and retailers," remarked Sanai in the Independent article.

H&M had leased a piece of prime real estate, on Fifth Avenue just across the street from Rockefeller Center, and spent heavily on a pre–launch advertising campaign geared toward an opening date of March 31, 2000. Persson was confident about entering such a tough, saturated market when he spoke to WWD writer Anne D'Innocenzio on the night before the flagship New York store opened to the public. "We are giving an extra edge when it comes to fashion," he told D'Innocenzio. "We are giving value for the money. Americans like to make a good deal." His instincts proved correct: When the doors opened the next day, shoppers besieged the multi–level emporium, and security personnel had to close the doors for a time because the space was above–capacity.

Part of H&M's success came from the in–house design team that Persson had established at company headquarters in Stockholm in the mid–1980s, staffed by recent design–school graduates. The company's manufacturing was then outsourced to a vast network of some 1,600 suppliers in countries like Bangladesh, China, and Turkey, where labor costs were low. Persson was also convinced that tweaking merchandise for different countries was a waste of company resources. "Everyone listens to the same type of music, watches the same films," he told D'Innocenzio in WWD.

Persson's father, Erling, died at age 85 in October of 2002. He and his sister, Lottie, hold some 70 percent of H&M voting shares, and 37 percent of its capital. H&M has survived economic downturns in the retail sector and has even thrived: on 2002 sales of $5.8 billion, the company turned an $833 million profit on an astonishing 550 million items sold. As H&M chair, Persson is known to run a frugal ship, albeit one staffed by 39,000 employees worldwide. Only a few executives have mobile–phone privileges, and those traveling on behalf of the company—which operates in 17 countries and began expanding into Eastern Europe in 2003—fly coach and do not submit expense–report receipts for cab rides. Persson described such budgetary concerns as "crucial," he asserted in an interview with the Financial Times's George in 2001. "If we are to survive with our business idea of having the best price and value, every unnecessarily spent krona [Swedish currency] will ultimately be put on the price and threaten the whole business idea."