H&M performs well in challenging fashion retail market

29 Mar '12

3 min read

Hennes & Mauritz AB (H&M) presents first quarter report for 2012. The H&M Group's sales including VAT increased by 13 percent in local currencies in the first quarter.

Sales in comparable units increased by 3 percent. Converted into SEK, sales excluding VAT amounted to SEK 27,832 m (24,503).

Gross profit amounted to SEK 15,537 m (14,174), corresponding to a gross margin of 55.8 percent (57.8). The decrease in the gross margin is due to increased purchasing costs combined with the fact that H&M has chosen not to raise its prices to customers. Increased markdowns have also contributed to the gross margin decrease.

Profit after financial items amounted to SEK 3,701 m (3,538). Group profit after tax amounted to SEK 2,739 m (2,618), corresponding to SEK 1.65 (1.58) per share.

- Very strong sales in March.

Sales in the period 1 – 27 March 2012 increased by 22 percent in local currencies compared to the same period last year.

- Successful opening in Sofia, Bulgaria in March.

By the end of 2012 H&M will have opened stores in five new countries: Bulgaria, Latvia, Malaysia, Mexico and, via franchise, Thailand.

New store chain to be launched in 2013.

Comments on the first quarter by Karl-Johan Persson, CE

“The new year has started well with a strong sales increase in the first quarter of 13 percent and 3 percent in comparable units. The positive development has continued in March, with very strong sales. Our collections have been well received which has resulted in increased market share in a very challenging fashion retail market, and we have strengthened our position even further. H&M is now present in 44 markets and our offering is appreciated by our customers worldwide.

H&M has a long-term perspective, we are investing for the future and we always have the customers in focus. Despite increased purchasing costs, we have continued to strengthen our customer offering – for example, by not raising our prices to customers. This has contributed to strong sales even if, combined with the increased purchasing costs, it has had a negative effect on the gross margin in the quarter. The increased purchasing costs are due partly to higher cotton prices at the time for sourcing for the quarter compared to the corresponding sourcing period the previous year, but also to our long-term investments aimed at broadening our total offering.

We are making these long-term investments in order to build an even stronger H&M, so that we can give our customers an even broader offering going forward. We have many different projects in progress and already next year we will be launching a completely new store chain. Like COS, which today is very successful with good profitability, the new chain of stores will be independent and complement the other offerings from the Group. We have great faith in this new brand and we see considerable potential for further initiatives.”

Hennes & Mauritz AB (H & M) was founded in Sweden in 1947 and is quoted on NASDAQ OMX Stockholm. The company's business concept is to offer fashion and quality at the best price. In addition to H&M, the group includes the brands COS, Monki, Weekday and Cheap Monday as well as H&M Home. The H&M Group has more than 2,500 stores in 44 markets including franchise markets. In 2011, sales including VAT were SEK 128,810 million and the number of employees was more than 94,000.

Hennes & Mauritz AB (H&M)

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