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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 4 research reports from 1 professional analysts.
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HENNES & MAURITZ AB-B SHS
HENNES & MAURITZ AB-B SHS
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.
30 Nov 16
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N+1 Singer - Morning Song 30-11-2016
30 Nov 16
Sanderson has delivered full year results in line with expectations and the 19 October trading update after a strong finish to the year compensated for a slower start. A healthy level of pre-contracted recurring revenue (50%), incremental sales to existing customers and new customer wins at higher average order values helped deliver solid revenue growth in both the Digital Retail (+9%) and Enterprise (+12%) divisions. A decent order book and good sales momentum suggest that the company is on track to deliver on unchanged profit expectations for the current year. We continue to view the valuation (FY17 EV/EBITDA 8.6x) as undemanding given an attractive combination of accelerating growth potential, strong cash generation and growing dividends.
Upgrade to BUY post-site visit
12 Aug 16
A positive site visit this week has given us comfort on FY16 (September) numbers. Our focus therefore now turns to FY17 forecasts, which bear upside risk, in our view. The share price remains 10% below pre-referendum levels and has been largely ignored in the post-Brexit recovery. We reaffirm our 350p price target and upgrade from Hold to Buy.