Press release
H & M Hennes & Mauritz AB Nine-month report
Nine months (1 December 2021 – 31 August 2022)
- The H&M group’s net sales in SEK increased by 13 percent in the first nine months of the financial year to SEK 161,120 m (142,154). In local currencies the increase was 8 percent.
- As communicated previously, a one-time cost for winding down the Russian operations has impacted the results for the period.
- The gross margin excluding the one-time cost for Russia was 51.3 percent (51.8).
The reported gross margin was 51.1 percent (51.8). - Operating profit excluding the one-time cost for Russia was SEK 8,099 m (8,996) and the operating margin was 5.0 percent (6.3). The reported operating profit was SEK 6,348 m (8,996), corresponding to an operating margin of 3.9 percent (6.3). For rolling 12 months the operating margin was 5.8 percent (6.6).
- The group’s profit after tax excluding the one-time cost for Russia was SEK 5,778 m (6,389), corresponding to SEK 3.49 (3.86) per share. Reported profit after tax amounted to SEK 4,430 m (6,389), corresponding to SEK 2.68 (3.86) per share.
- Financial net cash was SEK 17,441 m (24,874). Cash and cash equivalents plus undrawn credit facilities amounted to SEK 45,700 m (55,408).
Third quarter (1 June 2022 – 31 August 2022)
- Net sales increased by 3 percent to SEK 57,450 m (55,585). In local currencies, net sales decreased by 4 percent.
- A one-time cost of SEK 2,104 m related to the winding down of the Russian operations has impacted the result for the quarter.
- Gross margin excluding the one-time cost for Russia was 50.4 percent (53.2). The reported gross margin was 49.0 percent (53.2). Increased raw materials and freight prices as well as a stronger US dollar resulted in substantial cost increases for purchases of goods.
- Operating profit excluding the one-time cost for Russia was SEK 3,006 m (6,272), corresponding to an operating margin of 5.2 percent (11.3). The reported operating profit was SEK 902 m (6,272), corresponding to an operating margin of 1.6 percent (11.3).
- The group’s profit after tax excluding the one-time cost for Russia was SEK 2,151 m (4,692), corresponding to SEK 1.30 (2.83) per share. Reported profit after tax amounted to SEK 531 m (4,692), corresponding to SEK 0.32 (2.83) per share.
- The autumn collections have been well received. Sales increased by 7 percent in local currencies in the period 1 – 27 September 2022 compared with the same period in 2021.
- A cost and efficiency programme is being initiated to further streamline the business. Overall, this is expected to result in annual savings of around SEK 2 billion. The savings from the programme is expected to become visible in the second half of 2023.
- Agreements have been signed with developers of new solar farms to secure access to renewable energy for many years to come. This will help the H&M group reach its carbon reduction targets as well as securing energy prices for parts of its own operations.
“The autumn collections have been well received and sales in September are up on the previous year, providing important proof that the H&M group is growing even when customers’ purchasing power is decreasing,” says Helena Helmersson, CEO.
Comments by Helena Helmersson, CEO
“The third quarter has largely been impacted by our decision to pause sales and then wind down the business in Russia. This has had a significant effect on our sales and profitability, which explains half of the decrease in profits compared with the third quarter last year. Many other external challenges also made their mark on the quarter. In common with the rest of the industry, sales were weak in many of our major markets at the start of the period. Sales then gradually improved, despite of a heatwave in several European countries and some remaining delays in the supply of goods. Increased raw materials and freight prices as well as a stronger US dollar resulted in substantial cost increases for purchases of goods. We have chosen not to fully compensate for the increased costs, which is reflected in the gross margin. Overall, these factors had a substantial negative impact on profit for the quarter.
Long-term initiatives to meet customers’ ever-increasing expectations are continuing. This involves ensuring the best customer offering for all the brands and the best customer experience. In a situation of high inflation where household living costs are rising significantly it is more important than ever to offer customers the best value for money.
Sales channels are being increasingly integrated, alongside continued digitalisation of the supply chain. Efficiency, speed and flexibility have never been more important. In parallel, a programme to reduce costs and further improve efficiency is being initiated. From the second half of 2023 onwards this is expected to result in annual savings of around SEK 2 billion.
With loyal customers all over the world, engaged colleagues and sound finances, in combination with a long-term perspective, we see good opportunities to strengthen our position despite the situation in the world around us. The autumn collections have been well received and sales in September are up on the previous year, providing important proof that the H&M group is growing even when customers’ purchasing power is decreasing.”
Communication in conjunction with the nine-month report
The nine-month report, i.e., 1 December 2021 – 31 August 2022, will be published at 08:00 CEST on 29 September 2022, followed by a telephone conference at 09:00 CEST for the financial market and media. The telephone conference will be held in English, hosted by CEO Helena Helmersson, CFO Adam Karlsson and Head of IR Nils Vinge.
For log in details for the telephone conference please register at hmgroup.com or via this link:
https://services.choruscall.it/DiamondPassRegistration/register?confirmationNumber=2619696&linkSecurityString=3035c8a40
To book interviews in conjunction with the nine-month report on 29 September 2022, please contact: Kristina Stenvinkel, telephone: +46 70 796 54 40, stenvinkel@hm.com or Anna Frosch Nordin, Head of Media Relations, telephone +46 73 432 93 14, anna.froschnordin@hm.com.
Contact
Nils Vinge, Head of IR +46 8 796 52 50
Helena Helmersson, CEO +46 8 796 55 00 (switchboard)
Adam Karlsson, CFO +46 8 796 55 00 (switchboard)
H & M Hennes & Mauritz AB (publ)
SE-106 38 Stockholm
Phone: +46-8-796 55 00, e-mail: info@hm.com
Registered office: Stockholm, Reg. No. 556042-7220
For more information about the H&M group visit hmgroup.com.
Information in this interim report is that which H & M Hennes & Mauritz AB (publ) is required to disclose under the EU Market Abuse Regulation (EU) No 596/2014. The information was submitted for publication by the abovementioned persons at 08:00 (CEST) on 29 September 2022. This interim report and other information about the H&M group, is available at hmgroup.com.
H & M Hennes & Mauritz AB (publ) was founded in Sweden in 1947 and is quoted on Nasdaq Stockholm. H&M’s business idea is to offer fashion and quality at the best price in a sustainable way. In addition to H&M, the group includes the brands COS, Monki, Weekday, & Other Stories, H&M HOME and ARKET as well as Afound. For further information, visit hmgroup.com.