H&M Built Six Brands to Disrupt Itself. It Forgot to Disrupt the One That Mattered.

In March 2007, H&M opened a store on London's Regent Street and threw a catwalk show at the Royal Academy of Arts. The brand was called COS - minimalist, restrained, more expensive, aimed at a shopper who found H&M a little loud.² Business schools have been telling a tidy story about that day ever since: H&M, seeing the future, bravely set out to disrupt itself before someone else did. Over the next decade came & Other Stories, ARKET, Afound, and the acquired labels under it. A portfolio. A hedge. A textbook case of a company eating its own lunch on purpose.

The story is wrong. H&M strategically cannibalized its mass-market cash cow with a stable of premium brands. H&M added new brands one at a time, reactively, over eleven years - while the flagship it was supposedly disrupting expanded to its largest size ever. The thesis here is uncomfortable for the case writers: H&M never actually chose to disrupt its cash cow. The disruption was eventually imposed on it, by Shein, by Zara, and by a mountain of clothes it couldn't sell.

A cannibal doesn't keep feeding its prey

Real self-cannibalization has a tell: the incumbent product shrinks on purpose. Netflix let its DVD business decline because it was building the thing meant to replace it. H&M did the opposite. While COS, & Other Stories, ARKET and the rest were being bolted on between 2007 and 2018⁶, the flagship H&M brand was not contracting in deference to its premium siblings. The group's store count climbed straight through that decade and peaked at 5,076 in 2019.⁵ You do not feed a business to a record high while claiming you're trying to eat it. The portfolio and the core were both growing at once - which is not cannibalization. It's expansion wearing the costume of strategy.

Look closely at what each new brand actually did, and the disruption story thins further. COS didn't take customers from H&M; it reached for a minimalist, less trend-driven mid-range shopper H&M had never served in the first place.² That's market expansion upward, not a cannibal turning on its host. & Other Stories is stranger still: by H&M Group's own account, the concept began as an internal plan to launch a premium beauty brand, and only after the pitch widened into a full fashion-and-accessories store.³ A deliberate weapon against your own core doesn't start life as a lipstick idea that grew.

The disruption that finally arrived had a return address

What happened after 2019 is the part the case studies quietly skip. The store count fell roughly 19% to 4,118 by mid-2025 - around 958 locations gone, the smallest footprint since mid-2016.⁵ If this were the planned disruption finally paying off, you'd expect the contraction to look chosen. It didn't. The closures accelerated under then-CEO Helena Helmersson after the pandemic forced the issue, against a backdrop of Shein and Temu carving into the budget end.⁵ The shrinking of the cash cow was not a decision H&M made. It was a bill it was handed.

Notice Afound, launched in 2018 as an off-price marketplace to clear the group's own excess inventory.⁴ That is the giveaway. A company confidently disrupting itself doesn't need a dedicated outlet to absorb the clothes it overproduced and couldn't sell. Afound wasn't a bold new front; it was a drain installed under a leak. The premium brands were the optimistic story management told. Afound was the honest one.

But didn't the portfolio quietly save the company?

The fair objection: maybe the disruption wasn't loud, but it worked - the premium brands grew up to cushion the flagship's fall, and that's a win even if it arrived sideways. It's a tempting read, and it cannot be supported. H&M Group does not publish individual brand P&Ls; COS, ARKET and the rest disappear into a consolidated line.⁸ So the claim that the portfolio 'offset' the core is precisely the claim the disclosures won't let you make. And the group-level numbers don't help the optimists: FY2024 net sales of SEK 234.5 billion actually came in below FY2023's SEK 236.0 billion in nominal terms, on a 7.4% operating margin.¹ A portfolio that had truly disrupted and replaced a fading core would show up as recovery. The top line shows a company still flat on its back, not one that successfully ate itself and emerged leaner.

The clearest tell of all is the current strategy. The 2024–25 plan under CEO Daniel Ervér isn't 'let the premium brands inherit the future.' It's to plant the H&M flag in the middle ground between ultra-budget Shein and more upmarket Zara - to defend the core, not retire it.⁷ After eighteen years of building a 'disruptive' portfolio, the strategy still rests on the cash cow nobody ever truly disrupted. That's not the endgame of a company that ate itself. It's the position of one that never decided to.

H&M spent over a decade and a half assembling the costume of a self-disruptor - the premium brands, the design credibility, the Regent Street openings - and never put on the role. It kept the cash cow fattening to a record while telling the world it was preparing to slaughter it. Then Shein, the pandemic, and its own unsold inventory did the slaughtering instead, on a timetable nobody at H&M chose. The portfolio wasn't a bet on the future. It was insurance against a decision the company kept declining to make - until the decision was made for it.