H & M Hennes & Mauritz releases fiscal first quarter data
The H&M group’s sales (December 2015 – February 2016) including VAT increased by 9 %in local currencies in the first quarter. Converted into SEK, sales including VAT increased by 8 % to SEK 50624 milliion (SEK 46791 million). Sales excluding VAT amounted to SEK 43691 million (SEK 40276 million)
• Gross profit amounted to SEK 22699 m (SEK 22213 million). This corresponds to a gross margin of 52.0 % (55.2 %).
• Profit after financial items amounted to SEK 3327 million (SEK 4723 million). The group’s profit after tax amounted to SEK 2545 million (SEK 3613 million), corresponding to SEK 1.54 (SEK 2.18) per share. Profits in the quarter were negatively affected by substantially higher purchasing costs due to the strengthened US dollar and by increased markdowns.
• Very satisfactory sales and profit development for H&M’s e-commerce.
As of 31 March 2016 H&M offers e-commerce in an additional seven countries: Croatia, Estonia, Ireland, Latvia, Lithuania, Luxembourg and Slovenia. Very soon, H&M will launch e-commerce in Japan and later in the year also 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.
The H&M group’s sales including VAT in March 2016 increased by 2 percent in local currencies compared to the corresponding month the previous year. Total sales in March, April and May should be seen together, since Easter and weather effects during this period affect the comparability of an individual month.
The H&M group plans a net addition of around 425 new stores for the 2015/2016 financial year. Most of the expansion will take place in existing markets. New Zealand, Cyprus and Puerto Rico are planned to become new H&M markets. The group’s store number 4,000 will open in April, in Mall of India in New Delhi.
Karl-Johan Persson, CEO, stated: “Sales including VAT in the first quarter amounted to almost SEK 51 billion and profit before tax to just over SEK 3.3 billion. In local currencies, sales increased by 9 %, which was slightly below plan. This should be seen in the light of a very good first quarter last year when sales increased by 15 percent in local currencies and profits in SEK increased by 35 percent.
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. 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.
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. The spring will bring many store openings, for example, the opening of flagship stores in South Africa, Switzerland, Hungary and India. Since 2010 we have doubled the number of stores in the group, and this April we will pass another milestone when store number 4000 opens. The store will open in Mall of India, New Delhi – in India, where H&M has had a very good reception since the first stores opened last year.
For the past few years we have been in an intensive period of investments related to new brands and concepts, as well as IT and online. Among other things, these investments have enabled a fast roll-out of H&M’s very profitable e-commerce to further markets. This year alone we will add 11 new H&M online markets: Ireland, Croatia, Slovenia, Estonia, Latvia, Lithuania, Luxembourg, Japan, Greece, Canada and South Korea, which means that H&M will offer e-commerce in a total of 34 markets by the end of the year and preparations are under way for a continued roll-out into all markets in the group.
Another important part of our long-term work on further strengthening the group’s future market position is our ability to offer customers a wider selection of brands with different identities. Our new brands – COS, & Other Stories, Monki, Weekday och Cheap Monday – represent an increasingly important part of the group and we are looking forward to launching more new brands further ahead.
The management is also continuing its ambitious work on sustainability, which is an integral part of our customer offering. Tomorrow, on 7 April, this year’s edition of the much-appreciated “H&M Conscious Exclusive” collection will be launched in around 180 selected stores and online. If you want to know more about the sustainability work, the sustainability report “H&M Conscious Actions Sustainability Report 2015” will be available on the company’s website as of April 14, 2016.”