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MarketScreener Homepage  >  Equities  >  NASDAQ OMX STOCKHOLM  >  Hennes & Mauritz    HM B   SE0000106270

HENNES & MAURITZ (HM B)
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Hennes & Mauritz : H&M Warns of Challenging Year But Sees Results Starting to Improve

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02/14/2018 | 09:21am CEST
   By Dominic Chopping 
 

STOCKHOLM--Hennes & Mauritz AB (HM-B.SK) said Wednesday that this year will be challenging as it continues to build its online presence. Nevertheless, as sales from both the internet and new stores grow, it expects improved results in 2018.

In a statement released in conjunction with its capital markets day in Stockholm, H&M said this year has started on a tough footing, with high opening stock levels from the fourth quarter of 2017 and imbalances in its product range resulting in high markdown costs. This will have a negative effect on earnings at the start of the fiscal year, which began Dec. 1, it said.

But online sales are expected to increase by at least 25% in 2018, while new business sales are also expected to increase by at least 25%. Sales in newly opened stores should add around 4% to group sales in 2018, it added.

"Overall, it is assessed that there are good opportunities for a somewhat better result for the full year compared with the previous year," the company said in a statement.

H&M has trailed competitors in the move to online sales, but its digitization process is now in full swing, with online sales contributing 29 billion Swedish kronor ($3.6 billion), or 12.5%, to group sales last year. That was equivalent to 22% of operating profit, it added.

H&M said online sales should grow by around 20% a year from 2019, reaching SEK75 billion in 2022.

As it continues the shift to online, H&M said it will allocate an increasing share of investments and initiatives to its digital work. In the past financial year these made up 45% of the H&M group's total investments.

But the retailer still sees physical stores as an important driver. It expects to return to comparable positive sales from 2019 onward, with considerably lower price markdowns relative to sales compared with 2017. "Overall, this is expected to lead to good increases in profit," it said.

Write to Dominic Chopping at dominic.chopping@wsj.com; Twitter: @domchopping @WSJNordics

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Financials (SEK)
Sales 2018 207 B
EBIT 2018 17 497 M
Net income 2018 14 019 M
Debt 2018 6 361 M
Yield 2018 6,91%
P/E ratio 2018 15,40
P/E ratio 2019 15,24
EV / Sales 2018 0,95x
EV / Sales 2019 0,92x
Capitalization 191 B
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Mean consensus UNDERPERFORM
Number of Analysts 29
Average target price 121  SEK
Spread / Average Target -6,1%
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Managers
NameTitle
Karl-Johan Persson Chief Executive Officer
Stefan Persson Chairman
Jyrki Tervonen Chief Financial Officer
Morten Halvorsen Head-Information Technology
Anders Gunnar Dahlvig Independent Director
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