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

HENNES & MAURITZ AB

(HM B)
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H&M bounces back from coronavirus slump

09/15/2020 | 04:23am EST
FILE PHOTO: Woman passes closed H&M store during the global outbreak of coronavirus disease in Toronto

Sweden's H&M, the world's second-biggest fashion retailer, beat quarterly profit forecasts as it recovered more quickly than expected from a coronavirus-induced slump, in a positive sign for the industry.

Profit before tax for June-August, the company's third quarter, came in around 2 billion Swedish crowns ($229 million).

That was well below 5 billion crowns a year earlier, but much higher than analysts' mean forecast of 191 million crowns, according to Refinitiv's SmartEstimate model, which is weighted towards more recent estimates and higher-ranked analysts.

"H&M group's recovery is better than expected," the company said in a statement on Tuesday. "More full-price sales combined with strong cost control enabled the company to already turn to profit in the third quarter."

Sales fell 19% to 50.9 billion crowns, against expectations for an 18% drop. In local currencies, the fall was 16%.

"Very good news and well above consensus," said Societe Generale analyst Anne Critchlow of the third-quarter profits.

She has a 'hold' rating on the shares, which were up 11% in early trade, reducing their year-to-date decline to 16%.

Shortly after company veteran Helena Helmersson replaced the grandson of H&M's founder as CEO in January, the pandemic slammed H&M, pushing it into a deep loss in the March-May quarter as sales halved.

The company, which will publish its full quarterly report on Oct. 1, has been cutting staff, opening fewer new stores than planned and permanently closing others to cut costs.

"After its Q2 results, management warned that increased markdowns would hamper its earnings by around 2-3%-points, but this now appears to have reversed to a slight positive effect," analysts at Carnegie said in a note.

Analysts have been warning it will take time for fashion retailers' sales to recover to pre-pandemic levels, and recent signs of second waves of COVID-19 infections in some countries have added to the uncertainty.

RBC analyst Richard Chamberlain, with a 'sector perform' rating on H&M, said H&M's profit improvement augured well.

"We think most of this can be sustained going forward and expect consensus profit before tax upgrades for 2021-22 in the range of 5-10% following today. We also think this is a positive read for the apparel sector in general, eg, (Primark owner) ABF, Inditex and Next," he said.

H&M's biggest rival, Zara owner Inditex, will report May-July results on Wednesday. Britain's Next and John Lewis report on Thursday.

By Anna Ringstrom


© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
ASSOCIATED BRITISH FOODS PLC 1.43% 2353 Delayed Quote.-11.35%
FLAGSTAR BANCORP, INC. 0.65% 36.89 Delayed Quote.-3.56%
HENNES & MAURITZ AB 0.56% 187.2 Delayed Quote.-2.27%
INDUSTRIA DE DISEÑO TEXTIL, S.A. 0.00% 27.62 Delayed Quote.-12.08%
NEXT PLC -0.50% 6766 Delayed Quote.-3.33%
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Financials
Sales 2020 189 B 22 431 M 22 431 M
Net income 2020 1 411 M 167 M 167 M
Net Debt 2020 72 270 M 8 571 M 8 571 M
P/E ratio 2020 210x
Yield 2020 1,28%
Capitalization 308 B 36 498 M 36 539 M
EV / Sales 2020 2,01x
EV / Sales 2021 1,68x
Nbr of Employees 179 000
Free-Float 43,6%
Chart HENNES & MAURITZ AB
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Technical analysis trends HENNES & MAURITZ AB
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TrendsBullishBullishNeutral
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 26
Average target price 174,61 SEK
Last Close Price 186,15 SEK
Spread / Highest target 15,5%
Spread / Average Target -6,20%
Spread / Lowest Target -51,7%
EPS Revisions
Managers
NameTitle
Helena Helmersson Chief Executive & Operating Officer
Karl-Johan Erling Persson Chairman
Adam Karlsson Chief Financial Officer
Joel Ankarberg Chief Technology Officer
Anders Gunnar Dahlvig Independent Director
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