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H&M drops reinvestment plan, proposes unchanged dividend

Swedish fashion retailer H&M has dropped plans to ask shareholders to reinvest their dividend payouts in newly issued shares, saying the move had proved problematic to carry out. The retailer was set to make the request to its annual general meeting in May in order to help finance investments in analytics and technology and rekindle growth at the embattled firm.

According to the company investigation has shown the reinvestment plan would be difficult to implement, both from a technical perspective and because of time constraints. After decades of rapid store expansion, the world's second-biggest clothes group after Zara owner Inditex has struggled in the last couple of years to respond to the rise of ecommerce, with its sales growth and share price both drooping.

With the reinvestment plan off the table, H&M stated that it would propose paying an unchanged dividend of 9.75 Swedish crowns per share for the 2016/2017 fiscal year, to be paid in two instalments, one in May and the other in November.

H&M, which said last month that sales at the start of the year had been slower than expected, is due to hold its first ever capital markets day on Wednesday as it looks to reassure investors unnerved by a 50 per cent fall in the stock over the past two years.

 
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