Press release

H & M Hennes & Mauritz AB Three-month report

27 March, 2024

First quarter (1 December 2023 – 29 february 2024) 

• The H&M group’s net sales amounted to SEK 53,699 m (54,872).
• Gross profit increased by 7 percent to SEK 27,655 m (25,886). This corresponds to a gross margin of 51.5 percent (47.2).
• Operating profit amounted to SEK 2,077 m (725), corresponding to an operating margin of 3.9 percent (1.3). Adjusted for result from investments in associated companies and joint ventures of SEK -14 m (999) the operating profit amounted to SEK 2,091 m (-274), corresponding to an improvement in profit of SEK 2,365 m.
• The result after tax increased to SEK 1,201 m (540), corresponding to SEK 0.75 (0.33) per share.
• Cash flow from operating activities amounted to SEK 3,967 m (4,986).
• Financial net cash amounted to SEK 6,585 m (10,424). Cash and cash equivalents plus undrawn credit facilities were SEK 38,710 m (38,923).
• Currency adjusted the stock-in-trade decreased by 7 percent compared with the previous year. Converted into SEK the stock-in-trade decreased by 8 percent to SEK 37,630 m (41,040). The stock-in-trade in SEK represented 16.0 percent (17.9) of rolling 12-month sales.
   

• The H&M group’s sales in the period 1 – 25 March 2024 increased by 2 percent in local currencies compared with the same period the previous year.
• As previously communicated, the H&M group and Vargas Holding have co-founded Syre, which aims to rapidly scale textile-to-textile recycling of polyester and contribute to a more sustainable textile industry.
• Today the H&M group publishes its annual and sustainability report 2023. Among other things, the report shows a 22 percent reduction in greenhouse gas emissions in 2023. In relation to sales in SEK the decrease was 23 percent.*
• The annual general meeting will be held on 3 May 2024 to resolve, among other things, on the board’s proposed dividend of SEK 6.50 per share, to be paid in two instalments, and on a general authorisation allowing the board to buy back the group’s own B shares in the period up to the 2025 annual general meeting. This general authorisation is one of the tools for the board to use if surplus liquidity is identified. If the annual general meeting authorises the board and the board chooses to utilise this authority, amounts and other details will be communicated.
   

“Development continued in the right direction in the first quarter with an improved gross margin and operating profit, lower inventory and strong cash flow. Our top priority is to continue improving the customer offering, the store experience and the supply chain in order to increase sales.”

– Daniel Ervér, CEO. 

*   Refers to science-based targets for the company’s entire value chain in scope 3 and excludes the use of sold products. The baseline is 2019. By 2030 at the latest the H&M group is to reduce its scope 1, 2 and 3 greenhouse gas emissions by 56 percent.

**  Stock-in-trade in SEK as a share of rolling 12 months sales. 

Comments by Daniel Ervér, CEO 
  
We have a fantastic position with billions of visits a year to our physical and digital stores. We have more than 200 million customers in our loyalty programme, in a global market that external market analysts expect to grow by more than 5 percent a year up to 2028. With our long-term and high ambitions for a sustainable fashion industry, I am pleased and humbled to be entrusted with leading the H&M group.
  
In the first quarter we continued to take steps in the right direction, with a gross margin of 51.5 percent, a substantial improvement in operating profit to SEK 2.1 billion, inventory down by 7 percent and continued strong cash flow. Through continued cost control, better precision in our collections and close cooperation with our suppliers, we now stand better equipped.
  
We are fully focused on driving profitable growth going forward. Our stronger gross margin enables us to enhance the customer offering further and provide more value for money through improved quality and better prices. We are strengthening all parts of our assortment and our design organisation’s most important mission is to create attractive collections. The upgrading of our stores is being accelerated, for added inspiration and relevance to customers. We are refurbishing around 250 stores globally in 2024, including in New York, London, Berlin and Stockholm. As we reported previously, we are also continuing to simplify our organisation to make it more efficient and faster. Other examples of ongoing improvements include increased nearshoring and enhanced efforts in digitalisation and AI, enabling customers to access the most relevant fashion each time they meet with us. The quarter’s sales gradually improved during February with well-received Spring collections, which is a positive sign that we are on the right track.
 
The main focus for me and all my colleagues is on creating the best offering for our customers. Our priorities remain firm: to enhance the assortment, always offer the best price, create inspiring experiences in both physical and digital environments, and to strengthen our brands. Thanks to the investments being made in tech, the supply chain and sustainability, combined with continued cost control, committed colleagues and a long-term perspective, we see good opportunities for profitable and sustainable growth.
  
Today the H&M group’s annual and sustainability report is being published, which details our progress in areas such as increased use of sustainable materials and reduced climate impact. To achieve our ambitious climate goals we are investing, for example, in projects for transition to renewable energy among our suppliers and within innovation. We have co-founded the recently launched Syre, which aims to rapidly scale a circular model for polyester recycling.
  
We continue to plan our business with respect for a challenging situation in the world around us where consumers remain affected by inflation and high interest rates. In this situation our customer offering is more relevant than ever. Our top priority is to strengthen sales, and our target of a 10 percent operating margin for full-year 2024 thus remains in place.
 
*   For own operations (scope 1 & 2) and for the rest of our value chain (scope 3) and excluding use of sold products. 
 
Communication in conjunction with the three-month report 
 
The three-month report, i.e., 1 December 2023 – 29 February 2024, will be published at 08:00 CET on 27 March 2024, followed by a telephone conference at 09:00 CET for the financial market and media. The telephone conference will be held in English, hosted by CEO Daniel Ervér, CFO Adam Karlsson and Head of IR Joseph Ahlberg.
 
For log in details for the three-month report telephone conference please register via this link:  https://app.webinar.net/Bo9xPemPy5G
 
To book interviews in conjunction with the three-month report on 27 March 2024, please contact: Anna Frosch Nordin, Head of Media Relations, telephone +46 73 432 93 14, anna.froschnordin@hm.com.
  
Contact

  
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 (CET) on 27 March 2024. This interim report and other information about the H&M group are 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, ARKET and Afound as well as Sellpy. For further information, visit hmgroup.com.