H&M's Q1 sales up 9% in local currencies

Gross profit amounted to SEK 22,699 m. This corresponds to a gross margin of 52 per cent. Profit after financial items amounted to SEK 3,327 m. The group’s profit after tax was SEK 2,545 m, corresponding to SEK 1.54 per share. Profit in the quarter were negatively affected by substantially higher purchasing costs due to the strengthened $ and by increased markdowns.

The group’s sales including VAT increased by 2 per cent in local currencies in March 2016 as compared to the corresponding month the previous year. Total sales in March, April and May should be seen together as Easter and weather during this period affect comparability of an individual month.

H&M’s e-commerce reported very satisfactory sales and profit development. As of 31 March, 2016, the company offers e-commerce in seven additional countries: Croatia, Estonia, Ireland, Latvia, Lithuania, Luxembourg and Slovenia. Very soon, it will launch e-commerce in Japan, and later in the year in Greece, Canada and South Korea. A total of 11 H&M online markets will thus be added in 2016, which means that H&M will offer e-commerce in 34 markets by the end of the year.

Its store number 4,000 will open in the Mall of India in New Delhi in April. The group plans a net addition of around 425 new stores for the financial year 2015-16. Most of the expansion will take place in existing markets. New Zealand, Cyprus and Puerto Rico are planned to become new H&M markets.

Commenting on the results, Karl-Johan Persson, CEO of H&M said, “Profits in this year’s first quarter have been negatively affected by a continued very negative US-dollar effect which made our purchasing much more expensive, as well as by increased markdowns due to larger volumes of winter garments that remained as a result of the warm autumn.”

“Our strong expansion continues, we are gaining market share and we are confident that we can grow at a fast pace both through stores and online, in existing as well as in new markets, for many years to come,” he said.

For the second quarter of 2016, he said, “The negative dollar effect continues for purchases made for the second quarter 2016, although the negative effect has begun to gradually decrease due to the start of the annualisation of last year’s strong US-dollar exchange rate.”

“Should today’s exchange rates continue, the effect of the US dollar on purchasing costs for the fourth quarter will be neutral or slightly positive compared to the corresponding quarter the previous year,” he added. (MCJ)

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