H&M Has Lagged Behind Zara Owner Inditex In Online Shopping. Both Stocks Fell.

The Covid-19 pandemic caused sales to slump at retail giants Inditex and Hennes & Mauritz (H&M) in November, reversing glimmers of a recovery and shining a light on the very different online sales performance between the two companies.

Shares in both companies fell in European trading, with Inditex, which owns Zara, trading near 2% lower and H&M dropping more than 2% on Tuesday.

The back story. As global coronavirus infection rates slowed through the summer and government restrictions were loosened, shoppers flocked back to stores after months of retail closures. Both Spanish Inditex and Swedish H&M—the largest and second-largest fashion chains in the world, respectively—returned to profitability in the autumn after large losses.

With the Covid-19 pandemic keeping millions of shoppers housebound, Inditex has made a key investment in expanding online shopping. In June, the company announced a €2.7 billion ($4.34 billion) investment plan to improve online operations and increase store footprint, of which €1 billion was earmarked for digital investments.

H&M, still controlled by its founding Persson family, was already struggling before the pandemic hit. The company has been slower to shift to online shopping in favour of its more than 5,000 stores and the low-cost fashion strategy it helped pioneer.

What’s new. Both companies reported results on Tuesday—Inditex for the three months to the end of October, and H&M for the quarter ending Nov. 30 as well as the full year.

Store and online sales grew slowly from August to October at Inditex, with October sales at 94% of 2019 levels at constant currencies. In total, net sales of €6.1 billion in the third quarter were 14% lower than the same period in 2019. However, as coronavirus cases surged in November, 21% of stores remained closed and sales fell to 81% of 2019 levels.

At H&M, net sales for the fourth quarter were 10% lower in local currencies from the same period last year. Much of that came in the final month: sales were down by just 3% year-over-year from Sept. 1 to Oct. 21, but were 22% lower than 2019 in the period from Oct. 22 to Nov. 30.

Looking ahead. The results from the retail giants show the impact the second wave of Covid-19 has brought on sales. Fears over how much this hurts the bottom line for the full year is what may have caused both stocks to fall.

But the results also shine a light on the companies’ different online strategies—a crucial sales platform beyond the pandemic. Inditex reported that online sales grew 76% in the nine months to the end of October, while analysts expect H&M to lag far behind. The Swedish retailer didn’t post any fresh online figures on Tuesday. It had posted online sales growth of 40% in the second quarter and just 27% in the third.

A new investment fund targeting celebrity-founded consumer brands has secured US$40 million in commitments and is rapidly approaching its US$50 million fundraising target, signalling growing investor appetite for alternative opportunities beyond traditional asset classes.

The Global Talent Fund, which has a maximum raise of US$100 million, focuses on building and investing in consumer businesses alongside celebrities, athletes, and influential personalities who play an active role as co-founders rather than simply endorsing products.

The strategy is based on the belief that changes in consumer behaviour, particularly the rise of social media and digital engagement, have fundamentally altered how brands are built and scaled.

GTF founding partner Jeremy Hunt, who is helping lead the fund’s strategy, said consumers increasingly feel connected to personalities they follow online and are more willing to support products developed by those individuals.

“Consumers are searching for content to engage with, and when a celebrity they like or follow takes them on the journey of creating a product or brand, they genuinely feel part of that process,” he said.

The fund is targeting high-growth consumer sectors including wellness, hydration, beauty and recovery, areas Hunt believes continue to benefit from strong global demand and ongoing innovation.

Rather than backing celebrity endorsement deals, the fund is seeking businesses where talent is deeply involved in product development, brand creation and long-term growth.

According to Hunt, authenticity remains one of the biggest differentiators between successful celebrity-backed brands and those that fail.

“The consumer can see clearly if someone is simply being paid to promote a product,” he said. “The winners are typically the brands where the celebrity has genuinely helped build the business from the ground up.”

The model has attracted support from several prominent Australian investors and business families, reflecting broader interest in alternative investments with global growth potential.

Hunt said consumer brands offered a level of tangibility that many investors found appealing.

“Consumer brands are what we touch, feel, smell and taste every day,” he said. “Our investors understand the growth potential in the model, but they also want to be part of the journey.”

The fund’s rapid progress towards its fundraising target comes amid growing recognition that celebrity influence, when combined with strong commercial execution and scalable business models, can create significant enterprise value.

With several high-profile celebrity-founded businesses generating billion-dollar exits in recent years, supporters of the strategy believe the opportunity remains in its early stages.

H&M Has Lagged Behind Zara Owner Inditex In Online Shopping. Both Stocks Fell.

With US$40 million already committed, the Global Talent Fund is attracting investor attention with a strategy focused on building globally scalable consumer brands alongside high-profile talent.