Rolf Eriksen didn't find his dream job until he was 42. That was in 1987, when he was recruited by Swedish apparel retailer Hennes & Mauritz (HMRZF) to manage its Danish operations. "I had to think about it for a week," admits Eriksen, now 57. "I didn't know the company. But I've never regretted it."
That's because Eriksen and the family-controlled company, founded in 1947 by Swedish businessman Erling Persson, proved a perfect fit. Eriksen, after successfully running H&M's 49 stores in Denmark, also took charge of the chain's 118 stores in Sweden. Then, two years ago, H&M tapped Eriksen to be CEO when his flamboyant predecessor, Fabian Mansson, left to join a dot-com.
The market panned the choice, but Eriksen has since won over investors by doubling earnings per share and turning H&M into the hot apparel chain in Europe. He has slashed costs, streamlined distribution, and broadened H&M's line, which catered mainly to teenagers. In the process, Eriksen has turned H&M into a formidable challenger to the likes of Benetton Group, and in the U.S., H&M is a growing rival to Gap (GPS). "H&M [has] a very broad appeal," says Phil Clark, a retail analyst at Goldman, Sachs & Co. in London. The company's net income rose 49.5% in 2001, to $381 million, as sales jumped 29%, to $4.7 billion. Earnings rose a further 33% in the first quarter.
Eriksen's formula is simple. His stores feature plenty of basic clothing for women 15 to 35, plus duds for children and some casual men's wear. H&M also offers trendy styles for men, women, and children at moderate prices. Right now, the stores are pushing a retro hippie look with embroidered bell bottoms for men and peasant blouses for women. Clothing is priced moderately so customers can afford to buy new styles every year, Eriksen says. His ideal customer is a middle-class woman in her 30s with two children who shops for the family at H&M.
A conservative dresser himself who prefers dark suits, Eriksen sees consumers' tastes around the developed world as increasingly homogeneous, whether they are in New York, Paris, or Stockholm. For him, that means there is little need to customize offerings from market to market. "The world is becoming smaller and smaller," he says. "Especially the young customers. They are the same all over."
Drawing on that observation, he is expanding ambitiously in the U.S. After opening its flagship store on Fifth Avenue in New York in 2000, the company now operates 32 stores along the East Coast and plans to double that number within five years. Although only a few U.S. stores are profitable, Eriksen expects profits to improve steadily as sales increase and startup costs level off.
He also sees potential for growth in Canada and southern Europe, especially Italy and Portugal. Outside the Nordic markets, H&M's presence is largest in Germany, where it has 206 stores, followed by Britain with 59 and the Netherlands with 57. Altogether, by 2007, Eriksen hopes to be managing a chain of some 1,300 stores across Europe and North America. For now, he has no desire to expand into riskier Eastern European or Asian markets.
Eriksen's perch atop the corporate ladder is a long way from the Danish fishing village where he grew up. As a child, he figured he would end up in his father's painting business. He studied decorative furniture and scene painting at a local college but decided to explore other options. A part-time job on an advertising campaign for a Copenhagen department store led to a position at a retail chain run by Denmark's cooperative movement and, later, H&M.
Although he has been in the rag trade for decades, Eriksen has no plans to retire soon. "Maybe I'll work for 10 more years," he muses. "I love to work." Still, he doesn't let the job follow him home. "I'm a very private person when I'm not at work. I want to take care of my family," he says. Family includes two children, a grandchild, and his wife, Janne, who, he admits, shops at Gap as well as H&M. Eriksen takes that in stride. "It would be great if H&M customers only shopped at H&M. But it would be boring," he says. That's the sign of a confident manager.