H & M Hennes & Mauritz AB Nine-month report

Nine-months (1 December 2013 — 31 August 2014)

• The H&M Group’s sales including VAT increased in local currencies by 15 percent during the first nine months of the financial year. Converted into SEK, sales excluding VAT amounted to SEK 108,775 m (92,067), an increase of 18 percent.
•  Profit after financial items amounted to SEK 18,096 m (15,189), an increase of 19 percent. The Group’s profit after tax increased to SEK 13,754 m (11,544), corresponding to SEK 8.31 (6.97) per share.

Third quarter (1 June 2014 — 31 August 2014)

• Well-received collections resulted in strong sales and increased market share. The H&M Group’s sales including VAT increased in local currencies by 16 percent during the third quarter. Converted into SEK, sales excluding VAT amounted to SEK 38,805 m (32,040), an increase of 21 percent.
• Gross profit amounted to SEK 22,627 m (18,828), an increase of 20 percent. This corresponds to a gross margin of 58.3 percent (58.8).
• Profit after financial items amounted to SEK 6,967 m (5,830), an increase of 20 percent. The Group’s profit after tax increased to SEK 5,296 m (4,431), an increase of 20 percent, corresponding to SEK 3.20 (2.68) per share.
• H&M’s online sales in Italy and Spain, which were launched in August, have got off to a very good start.
• Continued strong sales development for the other brands in the H&M Group: COS, & Other Stories, Monki, Weekday, Cheap Monday and H&M Home.
  

• Sales in the period 1 September – 23 September 2014 increased by 7 percent in local currencies compared to the same period last year. Sales in September have so far been affected by the unusually warm weather in most markets.
• H&M’s online store in China, which was launched already in September, has got off to a very good start.
• Strong expansion in 2014, with approximately 375 new stores net in total.
  – The Philippines will become a new H&M market in October 2014.
• H&M’s opening in India, planned for autumn 2014, has been postponed until 2015. In 2015 H&M will also open in South Africa, Peru, Taiwan and Macau.
• H&M plans to open 8 – 10 new online markets in 2015.

 
Comments by Karl-Johan Persson, CEO

”We have continued to gain market share thanks to strong sales development for all our brands. We see this as proof of well-received collections. Combined with our expansion, this led to a sales increase of 21 percent in SEK in the quarter. Also the good growth in profits continued with an increase in operating profit of 20 percent – while we at the same time are in a very intensive investment phase to build an even stronger H&M.

So far this year we have increased sales by 18 percent in SEK after nine months and increased operating profit by 20 percent, i.e. by almost SEK 3 billion to SEK 17.9 billion.

Within online shopping, we are in the midst of an exciting expansion. This year we have opened four big new H&M online markets and next year we will open another 8 to 10 new H&M online markets. Our online openings have taken place at a rapid pace this year: France in March, Italy and Spain during August and already, in September, we have launched online sales in China. We have had a very good response from customers in all these countries. We see our online store as a very important complement to our physical stores as the online store makes it possible for us to increase our level of service and availability to our customers.

Our store expansion plan for 2014 remains intact, with a planned net addition of 375 new stores. During the summer, we opened another flag ship store on Fifth Avenue in New York. In October the Philippines will become a new H&M market whereas India, which was supposed to open in the autumn, has been postponed until 2015. In 2015, we also plan to open in South Africa, Peru, Taiwan and Macau.

We are looking forward to a busy and exciting autumn. Besides our store and online expansion, we are continuing to develop our customer offering including the broadening of H&M Sport and our extended shoe range, which will be available online as well as in selected stores during the autumn. In October, we will launch our new collection “H&M Conscious Denim” which is made of more sustainable materials.
Part of the collection includes recycled cotton from our global “Garment Collecting” initiative, which is part of our work on closing the loop for textiles as we want to reduce the environmental impact of clothing during its life cycle. 

Sustainability is important to both our customers and employees, and we are therefore using our size and influence to drive progress on both environmental and social issues. When our customers shop with us they need to feel sure that they are buying from a company that takes responsibility. We are convinced that our investments in sustainability are the right thing to do, even though it entails costs in the short term. We always take a long-term view, and we see sustainability as an investment in our common future.”

 
The information in this Interim Report is that which H & M Hennes & Mauritz AB (publ) is required to disclose under Sweden’s Securities Market Act. It will be released for publication at 8.00 (CET) on 25 September 2014. This Interim Report, and other information about H&M, is available at www.hm.com

Contact persons

H & M Hennes & Mauritz AB (publ)
SE-106 38 Stockholm
Phone: +46-8-796 55 00, Fax: +46-8-24 80 78, E-mail: info@hm.com
Registered office: Stockholm, Reg. No. 556042-7220
  

H & M Hennes & Mauritz AB (publ) 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, Cheap Monday, & Other Stories as well as H&M Home. The H&M Group has more than 3,300 stores in 54 markets including franchise markets. In 2013, sales including VAT were SEK 150,090 million and the number of employees was more than 116,000. For further information, visit www.hm.com.