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H&M posts 7 percent rise in FY16 sales, plans foray into five new markets

For the full-year as well as fourth quarter ending November 30, 2016 H&M group’s sales including VAT increased by 7 percent in local currencies. The company has said in a statement that it aims to achieve a sales growth target of 10-15 percent per year and will continue its offline and online expansion in the existing and new markets.

Commenting on the company’s annual performance, Karl-Johan Persson, CEO of H&M said, “2016 was an eventful year which included many positive things but also challenges for us as well as for the industry. For fashion retail in general, 2016 was at the same time a challenging year in which various external factors - including geopolitical events - had a negative impact on retail trade in many markets. This was particularly visible in France, Germany, Switzerland and Italy as well as in the US and in China. Since these markets represent a large share of our sales, this consequently had a great impact on our overall sales development.”

Full year and fourth quarter highlights

Converted into SEK, sales for the year, including VAT increased by 6 percent to 222,865 million Swedish krona (25,229 million dollars), while sales excluding VAT amounted to 192,267 million Swedish krona (21,765 million dollars). Gross profit increased to 106,177 million Swedish krona (12,018 million dollars) against 103,167 million Swedish krona (11,678 million dollars), corresponding to a gross margin of 55.2 percent.

Profit after financial items amounted to 24,039 million Swedish krona (2,721 million dollars) compared to 27,242 million Swedish krona (3,083 million dollars) last year. The group’s profit after tax amounted to 18,636 million Swedish krona (2,109 million dollars) against 20,898 million Swedish krona (2,365 million dollars), corresponding to11.26 Swedish krona (1.27 dollars) per share. The company said, profits during the year were negatively affected by increased mark-downs but also by higher purchasing costs from the strengthened US dollar.

The company reported continued strong online development for all brands both as regards sales and profitability and witnessed strong sales growth for COS, & Other Stories, Monki, Weekday and H&M Home during the year.

For the fourth quarter, H&M group’s sales including VAT increased by 7 percent in local currencies. Converted into SEK, sales including VAT increased by 8 percent to 61,098 million Swedish krona (6,922 million dollars). Gross profit increased to 30,027 million Swedish krona (3,398 million dollars), corresponding to a gross margin of 57 percent. Profit after financial items increased to 7,409 million Swedish krona (838 million dollars). The group’s profit after tax increased to 5,914 million Swedish krona (669 million dollars), corresponding to 3.57 Swedish krona (0.40 dollar) per share.

H&M ventures into new markets

H&M carried out a strong expansion during the year with a total net addition of 427 new stores and 11 new H&M online markets. At the end of the financial year H&M had 35 online markets and the number of stores amounted to 4,351 in 64 markets.

During the fourth quarter, the company ventured into new markets - Cyprus and New Zealand, as well as rolled out H&M online platforms in Canada and South Korea.

The Board of Directors proposes a dividend of 9.75 Swedish krona (1.10 dollars) per share for the 2015/2016 financial year.

Aims to grow sales by 10-15 percent per year

The group has announced a new growth target and aims to increase the sales by 10 – 15 percent in local currencies per year with continued high profitability.

The H&M group’s sales including VAT in December 2016 increased by 6 percent in local currencies compared to the same month the previous year. Converted into SEK the increase was 10 percent. The H&M group’s sales including VAT in the period January 1 to January 29, 2017 increased by 11 percent in local currencies compared to the same period the previous year.

The H&M group plans to open approximately 430 new stores net in the 2016/2017 financial year. Kazakhstan, Colombia, Iceland, Vietnam and Georgia are planned to become new H&M markets. In addition, H&M plans to continue its online roll-out into six new markets: Turkey, Taiwan, Hong Kong, Macau, Singapore and Malaysia. The company also plans to launch one or two new brands in 2017.

In brief

FY16 sales rise 222,865 mn SEK
Q4 sales up 61,098 mn SEK

Picture:Kenzo+H&M