H & M Hennes & Mauritz AB Three-month report

First quarter

• The H&M Group’s sales including VAT increased in local currencies by 12 percent during the first quarter. Converted into SEK, sales excluding VAT amounted to SEK 32,143 m (28,392), an increase of 13 percent.
• Gross profit amounted to SEK 17,641 m (15,679), an increase of 13 percent. This corresponds to a gross margin of 54.9 percent (55.2).
• Profit after financial items amounted to SEK 3,486 m (3,234), an increase of 8 percent. The group’s profit after tax increased to SEK 2,649 m (2,458), corresponding to SEK 1.60 (1.49).
• H&M Sport very well received in selected H&M stores in 18 countries and online. Continued roll-out to more stores and countries as well as further broadening of the sport range.

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• Sales during the period 1 March – 25 March 2014 increased by 12 percent in local currencies compared to the same period the previous year.
• Australia, the Philippines and India will become new H&M countries in 2014.
• Peru and South Africa will become new H&M countries in 2015.
• Four new large H&M online markets are planned to open in 2014:
  – France has opened already, on 13 March, and has been very well received by customers
  – Spain and Italy will become new online markets in early autumn 2014
  – China is planned to become a new online market at the end of 2014
• COS will open stores in four new countries in 2014 – in Australia, Switzerland,  South Korea and the US (New York and Los Angeles) as well as online in the US.
• & Other Stories will open stores in three new countries in 2014 – in Belgium,  the Netherlands and in the US as well as online in three new countries: Ireland, Austria and the US.
                         
  

Comments by Karl-Johan Persson, CEO
”Sales have got off to a good start with an increase of 12 percent in local currencies in the first quarter in a fashion retail market that in many places is still characterised by a challenging macroeconomic situation, and we have continued to gain market share.

Operating profit increased by 9 percent to SEK 3.4 billion, despite our substantial long-term investments in areas such as IT and online. These investments, which we see as very important, have enabled us – among other things – to open our online store in France already on 13 March. The initial response from our customers has been very positive. If we disregard cost increases for the long-term investments, operating profit would have increased by 14 percent compared to the corresponding quarter last year.

We are continuing to work intensively on the global roll-out of our online store to new countries. Spain and Italy will become new H&M online markets in early autumn. In addition, preparations are under way for the opening of our online shop in China at the end of the year.

In 2014 we plan to open a total of 375 new stores net including many interesting store openings worldwide. We will open more H&M flagship stores than last year, for example in the General Post Office building in Melbourne, at Piazza del Duomo in Milan, on East Nanjing Road in Shanghai and on Weinstrasse in Munich, as well as a further two new flagship stores in Manhattan – on Fifth Avenue and Herald Square.

New H&M countries for 2014 will be Australia in April and the Philippines and India during the second half; three important markets where there is great interest in H&M.

Expansion continues for our other brands. For example COS will open its first stores in the US, South Korea and Australia while the first COS store in Switzerland opened in February. Belgium, the Netherlands and the US will become new markets for & Other Stories stores in 2014. In addition to this, COS will open its online store in the US and & Other Stories will open its online store in Austria, the US and Ireland.

We have a strong customer offering with many great collections and we are constantly working to further develop and broaden our product range. One example of this is our extended H&M Sport range, which has been very well received by customers and will be launched in even more countries. Furthermore, we are continuing our focus on sustainability so that H&M is the more sustainable option for our customers. The fact that we have just been named by Ethisphere Institute as one of the world’s most ethical companies provides proof of our sound sustainability work.”
           

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 27 March 2014. This Interim Report, and other information about H&M, is available at www.hm.com

            
CONTACT PERSONS
Nils Vinge, IR                                   +46-8-796 52 50
Karl-Johan Persson, CEO             +46-8-796 55 00 (switchboard)
Jyrki Tervonen, CFO                         +46-8-796 55 00 (switchboard)  

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 3,200 stores in 53 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.