Hennes & Mauritz’s (H&M) latest nine-month performance report card spanning December 1, 2022 to August 31, 2023 shows the group’s net sales in Swedish Krona increased by 8 per cent to SEK 1,73,385 million. In local currencies, net sales were flat compared to previous year. Gross profit increased to SEK 87,239 million which corresponds to a gross margin of 50.3 per cent. Selling and administrative expenses amounted to SEK 78,016 million and in local currencies, these expenses decreased by 3 per cent. Operating profit increased to SEK 10,205 million corresponding to an operating margin of 5.9 per cent. In 2022 one-time costs for Russia of SEK 1,751 million were charged against the nine-month result. Adjusted for these one-time costs the increase compared with the previous year was 26 per cent. Post-tax revenue is up 61 per cent to SEK 7,147 million.
Western Europe remains largest market
The report shows H&M’s unquestioned largest market remains within Western Europe with sales at SEK 57,723 million followed by the combined Americas at SEK 39,818 million. Asia, Oceania and Africa contributed SEK 23,074 million in sales.
Within Europe, Eastern Europe fared the lowest at SEK 14,093 million. Sales were temporarily resumed in Russia from August until November 2022. Development in Eastern Europe should be seen in light of H&M group’s operations in Russia and Belarus which completely closed down since November 30, 2022, while operations in Ukraine paused since end of February 2022. Excluding Russia, Belarus and Ukraine, sales in Eastern Europe for the first nine months, increased 17 percent in SEK. Sales during September 2023 are expected to decrease by 10 per cent in local currencies compared to September 2022.
The discontinued operations in Russia account for 4 percent points of the decrease. The figure for September should be seen in the light of unusually hot weather in several of the company’s European markets, which has had a substantial negative impact on sales during the month. H&M plans to gradually reopen most of its stores in Ukraine from November 2023 onwards. H&M clocked SEK 22,723 million and SEK 15, 954 million in these nine months in Southern Europe and the Nordic countries respectively.
Customers a priority over profits
Speaking on the results CEO Helena Helmersson says, “In times of high inflation where household living costs continue rising significantly, it is more important than ever to offer customers the best price and unbeatable value for money. Our highest priority remains the customer offering, where work to improve the assortment and the customer experience is making progress, alongside further integration of the two channels.” H&M is continuing investments in tech, AI and the supply chain, which is enabling improved flexibility, faster response times and greater precision in buying. This leads to customers having access to an even wider and more relevant assortment.
She also emphasized their efforts to create conditions for profitable growth towards long-term goals is taking H&M in the right direction. “The cost and efficiency programme is proceeding at full speed and will continue to have an effect in the coming quarters. With a strong customer focus, improved cash flow and increased inventory efficiency our goal of an operating margin of 10 per cent during 2024 remains.”