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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 : Summer ranges lift H&M's sales but at a price

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09/16/2019 | 05:31am EST
FILE PHOTO: H&M Chief Executive Karl-Johan Persson poses for a picture at the fashion retailer's headquarters in Stockholm

STOCKHOLM (Reuters) - The popularity of its summer ranges helped Sweden's H&M enjoy its strongest sales growth in three years in local-currency terms but its shares slipped on Monday on concerns over profit margins.

There were echoes of a report from Inditex , the world's biggest fashion retailer, where disappointing margin growth overshadowed a strong rise in sales in first half figures released last week by the owner of Zara stores.

H&M said sales before currency moves were up 8% in June-August, its third quarter, from a year ago. It was the fifth straight quarterly rise and the fastest pace recorded since the third quarter of 2016.

"Well-received summer collections and increased market share confirm that the H&M group is on the right track with its transformation work," H&M said in a statement.

H&M, however, also said activity levels related to its transformation project -- efforts to revive its business -- remained high in the quarter, an indication investments in physical stores and online weighed on margins again.

"With top-line growth fuelled by investment into price and the omni-channel proposition, we believe investors may be cautious into full Q3 numbers on 3 October where we believe leverage may be limited," said Berenberg analysts, who have a "Sell" recommendation on the shares.

H&M's shares have soared around 50% this year on hopes that the world's second largest fashion retailer is getting back on track after years of falling profits due to slowing sales at its core brand's stores, and investments to adapt to tougher competition and changing shopping habits.

SLOWING DOWN

The company is controlled by Sweden's wealthy Persson family and its Chief Executive Karl-Johan Persson is the grandson of the company founder.

The stock is still trading well below its 2015 peak of 369 crowns and many analysts remain cautious, awaiting clearer signs of recovery. On Monday, shares were down 2.3% at 186 crowns 0830 GMT to around 1-week lows.

Berenberg said local-currency growth matched expectations but given growth of 12% in June, it slowed to around 6% across July and August.

Net sales rose more than expected, by 12% to 62.6 billion crowns (£5.23 billion). Analysts had on average forecast a rise to 61.9 billion crowns, according to data from Refinitiv.

RBC analyst Richard Chamberlain, with an "Outperform" rating on the shares, said H&M probably benefited from a pick-up in its biggest market Germany after troubles with a new logistics system held back sales last year, and from its loyalty scheme rollout.

H&M will give more detail on the sales figures in connection with the release of the full earnings report on Oct. 3.

(Reporting by Anna Ringstrom, additional reporting by Helena Soderpalm; Editing by Kevin Liffey, Himani Sarkar and Alexander Smith)

By Anna Ringstrom

Stocks mentioned in the article
ChangeLast1st jan.
HENNES & MAURITZ 0.04% 185.16 Delayed Quote.46.87%
INDUSTRIA DE DISEÑO TEXTIL, S.A. 0.43% 28.1 End-of-day quote.25.19%
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Financials (SEK)
Sales 2019 233 B
EBIT 2019 16 775 M
Net income 2019 13 045 M
Debt 2019 12 010 M
Yield 2019 5,22%
P/E ratio 2019 23,4x
P/E ratio 2020 21,6x
EV / Sales2019 1,37x
EV / Sales2020 1,30x
Capitalization 306 B
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Technical analysis trends HENNES & MAURITZ
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TrendsBearishBullishBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus UNDERPERFORM
Number of Analysts 24
Average target price 164,09  SEK
Last Close Price 185,08  SEK
Spread / Highest target 27,0%
Spread / Average Target -11,3%
Spread / Lowest Target -59,5%
EPS Revisions
Managers
NameTitle
Karl-Johan Erling Göran Persson Chief Executive Officer
Stefan Persson Chairman
Helena Helmersson Chief Operating Officer
Jyrki Tervonen Chief Financial Officer
Joel Ankarberg Head-Information Technology
Sector and Competitors
1st jan.Capitalization (M$)
HENNES & MAURITZ46.87%31 765
INDUSTRIA DE DISEÑO TEXTIL, S.A.25.19%96 271
KERING32.60%75 381
FAST RETAILING CO., LTD.24.71%63 271
ROSS STORES36.26%41 008
BURBERRY GROUP PLC24.00%11 312