FULL YEAR RESULTS 1 December 1999 to 30 November 2000
• Turnover for the year amounted to SEK 35,876 M including VAT (SEK 32,977 M), an increase of 9 per cent compared to last year. With comparable exchange rates, the increase was 12 per cent.
• Profit after financial items was SEK 4,003 M (SEK 4,759 M), a decrease of 16 per cent compared to last year, mainly due to price reductions, currency translation effects and investments in two new markets, the USA and Spain.
• Turnover for the fourth quarter amounted to SEK 10,448 M (SEK 9,428 M), an increase of 11 per cent compared to the fourth quarter 1999.
• 90 new stores were opened during the year and 21 stores were closed.
• The reception in the USA and Spain was far beyond expectation. All stores opened in these markets will generate a positive result during 2001.
• The Group's expansion runs according to plan. Approximately 100 new stores will be opened during 2001.
• The cost reduction programme - in total SEK 500 M - runs according to plan.
• The Board of Directors proposes a dividend of SEK 1.35 (SEK 1.35) per share.
Turnover - Reception exceeding Expectations in the US and Spain
Turnover for the H&M Group increased 9 per cent during the year (12 per
cent after adjustments for exchange rate fluctuations) and amounted to SEK
35,876.1 M (SEK 32,976.5 M), including VAT.
Turnover during the fourth quarter increased 11 per cent and amounted to
SEK 10,448.0 M (SEK 9,428.0 M).
The development of sales has been weak during the year, especially in
comparison to a strong year 1999. During the spring and the summer, sales
were affected negatively by an imbalance in the assortment mix between
high fashion garments and garments of basic fashion. This was followed by
an unusually warm autumn that resulted in reduced sales of primarily
outdoor garments. Also, expected sales increase of, among other things,
leather garments and wool sweaters was affected negatively by the warm
During 2000, 90 new stores were opened and 21 stores were closed. 14 of
the stores closed were the remaining stores of the Swedish "Galne Gunnar"
chain. The net increase of stores was 69, of which 46 occurred during the
fourth quarter. The total number of stores is now 682 (613).
H&M entered two completely new markets during the year, the USA and Spain.
To begin with, five new stores were planned for each of these two
countries during the year. Since sales significantly exceeded expectations
during the spring, the number of stores was expanded to ten in THE USA and
seven in Spain.
Sales outside Sweden accounted for 85 per cent (84) of total sales.
H&M plans to open approximately 100 new stores and to close six stores
during 2001. The main part of this planned expansion will take place in
Germany, Great Britain, France, the USA and Spain. Approximately 20 new
stores will be opened in the USA.
Gross profit for the year amounted to SEK 15,396.8 M (SEK 14,735.8 M),
which corresponds to 50.6 per cent (52.8) of sales.
After deduction of administrative and selling expenses, the operating
profit for the year amounted to SEK 3,766.6 M (SEK 4,580.0 M). This
corresponds to an operating margin of 12.4 per cent (16.4).
Operating profit for the year has been charged with depreciation according
to plan, amounting to SEK 629.1 M (SEK 457.0 M) and start-up costs, the
part of investments in new stores that is charged directly to the income
statement, of SEK 315.7 M (SEK 195.3 M). Operating margin, after
depreciation but before start-up costs, amounted to 13.4 per cent (17.1).
Group financial net interest income was SEK 236.6 M (SEK 178.6 M).
Profit after financial items was SEK 4,003.2 M (SEK 4,758.6 M), a
reduction by 16 per cent.
Profit after tax was SEK 2,552.7 M (SEK 3,075.4 M), corresponding to
earnings per share of SEK 3.08 (SEK 3.72).
Return on shareholders' equity was 23.0 per cent (32.9) and return on
capital employed was 35.8 per cent (50.3).
During the fourth quarter, gross profit was SEK 4,540.6 M (SEK 4,393.2 M)
and profit after financial items was SEK 1,390.4 M (SEK 1,549.8 M).
Comments on the Results
The H&M Group performs healthy profits despite the effects of large price
reductions and start-up costs in completely new markets.
This year's result, in comparison to 1999 which was a very good year with
a low level of price reductions, is affected by the following factors:
¤increased price reductions as a result of imbalance in the assortment
mix during the spring and summer, and unusually warm weather during the
autumn, SEK -600 M
¤negative currency translation effects, SEK -240 M. These effects arise
when results of foreign subsidiaries are translated into SEK in order to
be consolidated into the H&M Group accounts. The difference this year is a
result of the SEK having been strengthened against the European currencies
and weakened against the US dollar.
¤in addition to representing a part of the above mentioned items,
operations in the US and Spain show a negative result of approximately SEK
-360 M (where SEK 110 M constitute start-up costs).
¤the cost reduction programme has generated a positive effect of
approximately SEK + 210 M
H&M has built a strong platform for further expansion in the USA and Spain
during the year. However, it is costly to enter two new markets, as this
requires initial investments in infrastructure such as distribution
centres, training, administration, branding etc. The Group's assessment is
that H&M's potential in the new markets is very good. By 2003, 85 stores
are expected to have been opened in the north-eastern part of the USA.
Stockholm, 25 January 2001
The Board of Directors
Rolf Eriksen, CEO +46-8-796 5233
Carl-Henric Enhörning +46-8-796 5410
Leif Persson +46-8-796 1300
Kristina Stenvinkel+46-8-796 3908
Switchboard +46-8-796 5500
Information about H&M and press pictures are available on www.hm.com
H&M - in short
H&M was founded in 1947 and sells clothes and cosmetics in 682 stores in
14 countries. The business idea is fashion and quality at the best price.
H&M sells approximately 400 million articles per year. H&M's designers and
purchasing personnel create clothes for women, men, children and youth.
The group has approximately 30,000 employees.