H and M Plays Up Chains Fun Side in Expansion Plans IT is not often that the Grand Palais, one of the historic monuments of Paris, is host to a giant Ferris wheel, a spinning swing, a shimmering mini Eiffel Tower and a parade of scantily clad models showing lingerie on a catwalk resembling the Champs-Élysées. In the center of this adult amusement park stood Karl-Johan Persson, 34, in his new role as chief executive of H & M Hennes & Mauritz, his family's business, based in Sweden. The event this month was not only the executive's way of announcing the latest H & M designer collaboration, with the French fashion designer Sonia Rykiel, but also a first decisive step to show some post-recessionary fun. Mr. Persson was appointed to his post on July 1. He replaced the retiring chief executive, Rolf Eriksen, and followed in the footsteps of his father, Stefan, who was chief executive from 1982 to 1998; and his grandfather, Erling Persson, who founded the company in 1947. The world's third-largest fashion chain, after Gap Inc. and Inditex, which is based in Spain, H & M has become a leader in fast fashion - or what Mr. Persson likes to call "fashion and quality at the best price." This business strategy of keeping fashion fresh, as if it were a perishable good, has served the brand well. It has helped H & M see continual growth, and the company now has more than 1,900 stores across 35 countries, with plans to reach 2,000 by the end of 2010. Since 2004, H & M has gained particular fame with its highly successful designer collaborations. From its first partnership with Karl Lagerfeld to its most recent venture with Ms. Rykiel, the capsule collections have given the company a higher profile in the fashion world and have led to a new fashion business model as a flood of designer collaborations have been introduced by H & M's competitors. The most recent include Stella McCartney with Gap and Rodarte with Target. Dressed casually in an open white shirt and a dark suit from the company's more-upscale COS chain, which he conceived in 2007, Mr. Persson said his company was committed to a long-term view. "The main focus is on the customer, just to make sure they get a better offer all the time," he said. We are trying to make micro improvements and to keep the corporate culture that has been an important part of our success and it will be important to maintain going forward. To keep the designer-collaboration concept fresh, H & M has branched out into accessories from ready-to-wear. Its first shoes-line collaboration with Jimmy Choo made its debut in November, and its current Sonia Rykiel partnership includes a 70-piece lingerie line - another first for H & M - that was introduced Dec. 5 at 1,500 H & M stores. Next, a Sonia Rykiel knitwear capsule collection will be unveiled Feb. 20 in 200 H & M stores. Both the lingerie and knitwear will also be available in Sonia Rykiel stores - the first time H & M has allowed such joint marketing. Although the company does not break out sales figures, Mr. Persson said the designer collaborations did not account for a very large percentage of total profit. He also was upbeat about the company's profit margins in a time of global economic crisis. Net profit in 2008 was 15.3 billion kronor, or about $2.15 billion, up 11 percent from the previous fiscal year. Revenue for the year rose 13 percent, to 104 billion kronor ($14.5 billion). H & M shares have risen 40 percent in the last year on the Stockholm stock exchange. The company's strategy, Mr. Persson said, is to focus on the core of the business. "It is not about doing more collaborations, it is not about more acquisition," he said. The H & M store and online format is 99 percent of the business. We just need to continue to improve that further and maintain the corporate culture, to make sure that we have good people in place for future expansions. The company continues to forge ahead with its plans for growth, both online and in existing markets like France, which includes a 30,000 square-foot store on the Champs-Élysées. China, Germany, Italy, Japan, Spain and the United States are on Mr. Persson's short list of countries on which H & M will be focusing its attention. THE chain opened its first American store in 2000 in New York, surprising competitors and even itself when lines formed on Fifth Avenue to get in. It has expanded to 189 stores in the United States. "The U.S. is one of the most important expansion markets for H & M, and we see a huge potential," Mr. Persson said. Of course we are affected by the general economic situation but we are investing more than ever in refurbishing existing stores, opening new stores and we are constantly looking into improvements. A scion of a fashion family, Mr. Persson said that he had grown up with H & M; during his school years, he spent weekends and summer holidays learning about different aspects of the company. His father, who is still the chairman of the company, "always has room for my own thoughts and opinions." But Mr. Persson did not always work at the family company. After getting a bachelor's degree in business administration from the European Business School in London in 2001, he struck out on his own, creating a media and corporate events company called European Network, which he sold in 2004. "His leadership style is very inspiring," said Marcus Ostlundh, who started European Network with Mr. Persson. He is not a control freak, and he is very present and shows that he cares. Mr. Ostlundh said he was confident that the time Mr. Persson spent building his own company would be of immeasurable help to him in his new role. "He learned how to start and grow a business from nothing," Mr. Ostlundh said "It was very hands-on where you do everything yourself. He is a real doer.