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Research Tree provides access to ongoing research coverage, media content and regulatory news on HENNES & MAURITZ AB-B SHS. We currently have 6 research reports from 1 professional analysts.
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HENNES & MAURITZ AB-B SHS
HENNES & MAURITZ AB-B SHS
Underwhelming results in Q1
30 Mar 17
H&M has delivered a disappointing pace of growth in Q1, slowing down compared to FY2016 and far below the company’s target of 10-15% growth. Sales in Q1 were up 7.5% to SEK46,985m, underpinned by favourable forex moves as sales in local currencies were up by only 4%. A tough momentum was experienced in large markets such as Germany, the Netherlands and Switzerland where revenues were down 5%, 9% and 4% at CER respectively. In China, the group has performed well and grew by 19% in local currencies. The gross margin edged up 10bp to 52.1% generating a gross profit of SEK24,466m. Oddly, the operating profit was down 3.4% to SEK3,159m due to faster growing operating costs (+10%). Net profit plummeted by 3.5% to SEK2,457m. The group is rolling out its geographical expansion with five new footprint markets targeted during the year including Kazakhstan, Colombia, Iceland, Vietnam and Georgia. The online development is going ahead. Moreover, a new brand ARKET will be launched in the coming few months. Sales in March were up 7% in local currencies.
The best is coming
31 Jan 17
Sales in Q4 edged up 8.3% to reach SEK52,720m. Full-year sales were up 6.3% (+7% in local currencies) to SEK192,267m. A marked slump was experienced in Germany, France and Spain which posted almost flat sales in local currencies (0%, -1% and +1% respectively). An impressive sales growth was reported in Scandinavian countries, Russia (+38%), Turkey (+41%), Canada (+15%), and in newer footprints. In Q4, gross profit increased by 7.2% to SEK30,027m, i.e. a gross margin of 57% compared to 57.5% a year earlier. The operating margin dwindled by 60bp to 13.9%, generating an operating profit of SEK7,354m (+3.8%). Net profit for the three months was up 7% to SEK5,914m. For the full-year, the gross margin lost 180bp to 55.2%. The slight increase in the quarter’s profitability partially mitigated the full-year profit retreat. The full-year operating profit dropped 11.6% to SEK23,823m. The operating margin stepped back by 250bp to 12.4%. Net profit dropped by 10.8% to SEK18,636m. Inventories surged by 26% yoy (in local currencies) to reach SEK31,732m. Gross cash shrank by 27% at SEK9,446m. Early FY2017 has sent positive growth signs with sales edging up 6% and 11% in local currencies respectively in December and January. The company has stepped up its growth target to 10-15% in local currencies per year starting from 2017 with much more effort on profitability. H&M operates in 35 online markets and 4,351 shops in 64 markets. The proposed dividend remained unchanged at SEK9.75, which will be paid in two instalments for the first time.
FY 16 margins under pressure
30 Sep 16
In the first nine months, sales growth was decent but margins were under external and internal pressures. Sales were up 5.6% to reach SEK139,547m, boosted by a rise of 6.4% in Q3 (SEK48.982m) compared to 5.1% in H1 16. Excluding Germany and Switzerland, which posted respective sales decreases of 1% and 9%, all regions experienced favourable momentum at local currencies led by the USA and Sweden (+7%). Following the weakening of the British pound, the performance in the UK turned negative (-5%) while, at local currency, revenue grew by 2%. Profitability was hit by the surging purchasing costs following the appreciation of the US$ as well as the heavy mark-downs applied in the current unusually warm weather. Moreover, operating investments incurred in the expansion plan are pulling margins down. The operating margin slipped to 11.8% (-3.2pc), dwindling the operating profit by 17% to SEK16,469m. Q3 operating profit was down 9% to SEK6,247m, i.e. an operating margin of 12.8%. Net profit amounted to SEK12,722m (-17.2%) since the beginning of the year. The slowdown is likely to continue in Q4 due to the warm September in which sales are expected to increase by 1% in local currencies. Capex surged by 75.7% to SEK9,378m. The operating cash flow remained almost flat at SEK17,549m. Stock in trade ballooned by 25.7% compared to year-end 2015 to reach SEK31,231m, i.e. 22.4% of sales. The financial position remains strong even with slipping cash to SEK8,68m. The group is currently operating through 4,135 stores and 35 on-line markets.
22 Jun 16
The challenging trading conditions are weighing on the fast fashion sector. H&M reported a modest 5.1% sales growth in 1H16 to SEK90.6bn. The gross margin retreated by 250bps to 54.9% leading to a gross profit of SEK49.68bn. Operating profit dropped from SEK13bn in 1H15 to SEK10.2bn in 1H16, i.e. a 21.3% decline. The operating margin fell to 11.3% vs. 15.1 in 1H16. The net profit amounted to SEK7.9bn versus SEK10.06bn a year earlier. 2Q16 posted a poor performance of 2.2% pulled down by unfavourable sales momentum in March. The quarter’s operating profit amounted to SEK6.95bn vs. SEK8.35bn in 2Q15. Most markets experienced a tough trading backdrop led by Switzerland which posted a 10% sales fall. Germany, the main market accounting for 17.2% of FY15 sales, reported a slight decrease of 0.3%. Favourable momentum was noted in the USA with a performance of 9%. Stock in trade ballooned by 29% to SEK25.3bn, i.e. 50 days of sales rolling out twelve months. The expansion plan continued in the 1H with 153 net new openings, bringing the total stores to 4,077 as of May 2016, of which only 171 franchises. 1H16 Capex amounted to SEK5.6bn versus SEK4.7bn a year earlier. The 3Q16 also looks challenging as sales including VAT in the 1-21 June 2016 period increased by 7% in local currencies.
The warm weather caught the Q1 performance in a whirlwind
06 Apr 16
The warm weather has put the Q1 performance under pressure. Sales growth slowed to 9% (in local currencies) yoy compared to 15% in Q1 15 and 11% in FY15 due to the markdowns on large stocks of winter garments. Sales amounted to SEK43.7bn vs. SEK40.3bn a year earlier. Aside from the price deflation, the mild weather caused a slump in demand for winter collections and pulled down sales. The heavy discounts coupled with the higher purchasing costs crumbled margins and deteriorated the operational performance. The gross margin lost 320bp to 52% dropping the operating profit by 29.5% to SEK3.3bn. Net profit decreased from SEK3.6bn to SEK2.6bn. The geographical breakdown reported an outperformance in the American and Italian markets which increased by 11% in local currencies. The main market (Germany), contributing 17% to revenues, disappointed with almost flat sales (+1%). The stock in trade jumped by 25% yoy to SEK25.2bn, amounting to 13.6% of sales on a rolling twelve months. The expansion plan is maintained both through stores and online and the full-year 2016 is expected to add 425 new stores to the current 3,970. Only 46 net additions were reported in Q1. Capex amounted to SEK2.5bn vs. SEK2.2bn in Q1 15. H&M is currently present in 61 markets and the expansion would consolidate these current markets with a focus on China and the USA. The online services are provided in 23 markets and are expected to be extended to 34 by the end of the year.
FY2015, the best results ever
28 Jan 16
The top line impressed with 19.4% full year sales growth to SEK180,861m. In local currency, the growth was limited to 11%. A very strong expansion was reported during the year with a total net addition of 413 new stores and ten new online markets. As of November 2015, H&M had 23 online markets and the number of stores was 3,924 in 61 markets. The company invested mainly in China and USA with 83 and 59 respective new stores in 2015. The gross margin lost 180bps to 57% pulling down the operating margin to 14.9%, versus 16.9% a year earlier. The net profit improved by 4.6%, from SEK19,976m in 2014 to SEK20,898m in 2015. Given the significant expansion, more than 16,000 new jobs were created in the H&M group in 2015.
N+1 Singer - Morning Song 24-04-2017
24 Apr 17
First Derivatives (FDP LN) FY slightly ahead as strong trading momentum continues | Goals Soccer Centres (GOAL LN) A potentially exciting corporate development | mporium Group (MPM LN) 2016 results: course set for exciting 2017 | Vectura Group (VEC LN) VR315 risk outweighs longer-term potential
Small Cap Breakfast
19 Apr 17
Global Ports Holding—Intention to float on Standard List. International cruise ports operator. Seeking $250m raise including $75m primary offer. Dorcaster—Schedule One Update. Admission now expected 3 May. RTO of Escape Hunt raising £14m at 135p Verditek— Intention to float on AIM. On Admission, the Company's subsidiaries will be involved in advanced solar photovoltaic, filtration and absorption technologies specialising in providing environmental services. Raising £3.5m. Admission in May. Eddie Stobart Logistics— Schedule 1. Admission expected 25 April but capital raising details TBC. ADES International Holding— Intends to join the Standard List in May raising up to $170m plus a vendor sale. Provider of offshore and onshore oil and gas drilling and production services in the Middle East and Africa. Admission expected in May. Tufton Oceanic Assets– Offer extended to 9 May to enable investors to complete further due diligence.
N+1 Singer - Morning Song 20-04-2017
20 Apr 17
Carpetright (CPR LN) Preview – FY pre-close update due on Tuesday | SDL (SDL LN) Disposal of Social Intelligence | Senior (SNR LN) Q1 trading in line | Senior (SNR LN) Q1 trading in line | Servelec Group (SERV LN) Calling the bottom | Trifast (TRI LN) FY17 results ahead of expectations
Strong final results
20 Apr 17
The group has reshaped its business over the past two years, strengthening management and operational infrastructure, increasing capacity and reviewing strategic emphasis. We anticipate a progressive revaluation given the potential growth profile in an addressable and fragmented international market. Our 2017 forecasts remain unchanged following the results which imply EBITDA growth of 26%, and we raise our target price to 6p, implying potential share price upside of 23%.