H&M Q1 sales rise 6 percent

The H&M Group’s sales including VAT increased in local currencies by 6 percent during

the first quarter. Sales in the quarter have been negatively affected by calendar effects by slightly more than 2 percentage points. Converted into Swedish Krona, sales excluding VAT amounted to 28,392 million Swedish Krona (4,393 million dollars), an increase of 2 percent. The difference in sales performance in local currencies versus Swedish Krona is explained by substantial negative currency translation effects as a result of the continued strengthening of the Swedish krona against most sales countries’ currencies.

Gross profit amounted to 15,679 million Swedish Krona (2,424 million dollars), corresponding to a gross margin of 55.2 percent. Increased markdowns have negatively affected the gross margin by 0.5 percentage points in relation to sales compared to the corresponding quarter last year. Profit after financial items amounted to 3,234 million Swedish Krona (500 million dollars). The Group’s profit after tax amounted to 2,458 million Swedish Krona (380 million dollars), corresponding to 1.49 Swedish Krona (0.23) per share. Profits have been negatively affected by large long-term investments but also by substantial negative currency translation effects.

H&M is ramping up the pace of expansion. The expansion plan for financial year 2013 has been increased to around 350 new stores net from the 325 previously planned. Chile, Estonia, Lithuania, Serbia and, via franchise, Indonesia will become new H&M markets in 2013. Australia will become a new market for H&M in 2014. An extended sports concept will be launched at the beginning of 2014.

Commenting on the results, CEO, Karl-Johan Persson says, “The first quarter has been characterised by the continued challenging situation for the fashion retail industry in many of our markets mainly due to a continued tough macro-economic climate, but also due to unfavourable weather during parts of the quarter. This meant that sales in the first quarter did not reach our expectations. The reported sales increase in SEK has been affected by substantial negative currency translation. Excluding these negative effects the sales increase was 8 percent.