The CEO of H&M unexpectedly resigned on Wednesday, and Daniel Erver, a longtime employee of the company, was named the company’s new leader right away. The Swedish fashion retailer is finding it difficult to make this shift as it struggles to boost sales and profitability. The announcement caused shares of H&M Hennes & Mauritz AB to drop by 8%. After serving as the company’s CEO for four years, Helena Helmersson cited her decision to step down, calling the position “very demanding.” She claimed she didn’t have the energy to carry on in her current role in interviews with journalists.

The owners of Zara, Inditex, and the low-cost fast-fashion behemoth, Shein, have gained market share over the past year, making it difficult for the second-biggest listed fashion retailer in the world to compete. It has prioritized profitability over sales volume in its quest to hit the 10% operating margin target.

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H&M has transitioned to an online-only business model and closed over a thousand stores in Europe and Asia during the past two years. Its profit has also been harmed by increased raw material costs and a declining euro versus the dollar.

H&M reported on Wednesday that sales during the crucial Christmas shopping season in December and January had decreased by 4% from the prior year. Additionally, it issued a warning that there would be ongoing cost pressures, including growing freight and logistics costs.

Robert Henso

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