H&M third quarter pretax profit matches expectations

H&M third quarter pretax profit matches expectations

H&M third quarter pretax profit matches expectations

The FINANCIAL -- Well-received collections for all brands in the H&M group resulted in good sales and increased market share. The H&M group’s sales excluding VAT increased by 22 percent to SEK 132,167 m (108,775) during the first nine months of the financial year. In local currencies the increase was 12 percent.

Profit after financial items amounted to SEK 20,094 m (18,096), an increase of 11 percent. The group’s profit after tax increased to SEK 15,372 m (13,754), corresponding to SEK 9.29 (8.31) per share, an increase of 12 percent, according to H&M.

Third quarter (1 June 2015 — 31 August 2015)

The H&M group’s sales in SEK excluding VAT increased by 19 percent to SEK 46,024 m (38,805) during the third quarter. In local currencies the increase was 11 percent.

Gross profit amounted to SEK 25,712 m (22,627), an increase of 14 percent. This corresponds to a gross margin of 55.9 percent (58.3).

Profit after financial items was at the same level as last year and amounted to SEK 6,936 m (6,967). The group’s profit after tax amounted to SEK 5,306 m (5,296), corresponding to SEK 3.21 (3.20) per share.

H&M’s first stores in Macau were very well received on its openings in the quarter.

A very good start for H&M Beauty since its launch in July. H&M Beauty can today be found in around 700 stores in 28 markets and also at hm.com.

Sales including VAT in the period 1 September – 22 September 2015 increased by 12 percent in local currencies compared to the same period last year.

Continued strong expansion: approximately 400 new stores net are planned to open in 2015. India and South Africa will be new H&M markets in October 2015. Eight new H&M online markets have opened so far in 2015, all of which have had a very good reception. Switzerland and Russia will become new online markets during autumn 2015.

In the 2015/2016 financial year, H&M plans to offer e-commerce in a further nine existing H&M markets and also to open stores in three new markets: New Zealand, Cyprus and Puerto Rico.

Comments by Karl-Johan Persson, CEO

“So far this year our sales have exceeded SEK 153 billion including VAT, an increase of more than 20 percent – an acknowledgement that our collections are well appreciated worldwide. Sales were also good in the third quarter even though sales in August were negatively affected by the unseasonably warm weather in many of our large European markets. When the weather became more normal in September, sales took off again and we are looking forward to an exciting fashion autumn.

Profits have developed well during the first nine months of the year, although profits in the third quarter were negatively affected by increased purchasing costs due to the strong US dollar. As always, we are reviewing our customer offering in each market and we are monitoring the market closely to ensure that we offer the best combination of fashion, quality, price and sustainability.

We are also strengthening our offering by continuously developing and improving our range even further. For example, our new concept H&M Beauty was launched during the summer. H&M Beauty has enjoyed a very good start in around 700 stores in 28 markets as well as online. We are now continuing the roll-out to a further 14 markets during the autumn. We are also looking into launching other new concepts and brands; we will come back to this at a later date.

Our online roll-out to new countries is continuing according to plan. We will open our H&M online store in both Switzerland and Russia during this autumn, giving us 23 H&M online markets at the end of the financial year. In 2016 we plan to offer e-commerce in a further nine existing H&M markets. These countries will be Ireland, Japan, Greece, Croatia, Slovenia, Estonia, Latvia, Lithuania and Luxembourg.

In parallel with our rapid online expansion we are also opening stores at a fast pace. 

In the fourth quarter we will open approximately 240 new stores net – which is almost three new stores per day. India and South Africa will become two new and exciting H&M countries this autumn, when we open our first store in New Delhi next week and in Cape Town later on in October. Next year, we plan to open stores in three new markets: New Zealand, Cyprus and Puerto Rico.

Our other brands are performing well and are continuing to reach out to more and more customers. For example, COS now has around 130 stores across 27 markets, Monki more than 90 stores in 13 markets, & Other Stories 25 stores in 10 markets and Weekday 20 stores in five markets.

There is also much going on within our sustainability work. Our strategy for Fair Living Wages, which we are working on together with other big buyers in our purchasing countries, is showing good progress and now more and more of our suppliers will start using the Fair Wage method to achieve fairer wage setting for their employees. In addition, thanks to the commitment of our customers we have now collected almost 20,000 tonnes of garments for re-use and recycling since 2013. Some of these have been turned into brand new clothing, most recently into some great denim pieces currently in our stores. Through the H&M Conscious Foundation, which works on issues of concern, we contribute humanitarian support in countries where H&M operates. Alongside this the foundation has established a new prize, the Global Change Award, which encourages innovation in the textile industry. The aim is to develop new processes that enable used garments to be recycled on a larger scale, which we hope will lead our industry towards a more circular economy.”