Full year results 1 december 1999 to 30 november 2000

H & M HENNES & MAURITZ AB 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 weather. 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. Profits 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. Strong Financial Position The Group balance sheet increased by 11 per cent and was on 30 November 2000 SEK 15,700.4 M (SEK 14,198.2 M). During the year, the Group generated a positive cash flow from current operations of SEK 1,941.2 M (SEK 3,925.1 M). SEK 2,525.0 M (SEK 1,132.5 M) were invested in the operations through acquisitions of fixed assets. The financial assets amounted to SEK 5,403.2 M (SEK 6,832.4 M), a reduction with SEK 1,429.2 M. Stock-in-trade was SEK 4,448.7 M (SEK 3,609.3 M), an increase of 23 per cent (11). Stock-in-trade equals 14.6 per cent (12.9) of the turnover and 28.3 per cent (25.4) of total assets. The Group's debt ratio was 1.2 per cent (1.3). The share of risk-bearing capital was 79.8 per cent (76.4). The Group's equity was on 30 November 2000 SEK 11,889.8 M (SEK 10,293.8 M), which equals SEK 14.37 (SEK 12.44) per share. Employees The average number of employees in the Group was 20.680 (17.652), of which 3.556 (3.388) worked in Sweden. The Parent Company The parent company's profit after financial items, which is not equivalent to results from total operations in Sweden, amounted to SEK 2,034.7 M (SEK 1,611.4 M). Adjusted for dividend revenue from subsidiaries, the results were SEK 359.4 M (SEK 240.8 M). This year's profit after dispositions and tax amounted to SEK 1,933.7 M (SEK 1,516.5 M). December 2000 Despite that the warm weather in December 2000 had a negative effect on sales, the Group results were in line with December 1999. Dividend The Board of Directors will propose to the Annual General Meeting a dividend of SEK 1.35 (SEK 1.35) per share. Annual General Meeting of Shareholders The shareholders' meeting will be held on Monday, 23 April 2001, at 3 p.m. at Stockholmsmässan in Stockholm (Victoriahallen). The Annual Report is estimated to be published and distributed to shareholders during week 12, 2001. The annual report will be accessible at the head office of H&M, Norrlandsgatan 15, Stockholm, telephone: +46- 8-796 55 00 and on www.hm.com The H&M Group will produce the following financial reports during 2001: First Quarter results, 1 December 2000 - 28 February 2001 29 March 2001 Half Year results, 1 December 2000 - 31 May 2001 21 June 2001 Nine Months results, 1 December 2000 - 31 August 2001 28September 2001 Stockholm, 25 January 2001 The Board of Directors Contact persons: 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. ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2003/08/21/20030821BIT00120/wkr0001.doc The full report http://www.waymaker.net/bitonline/2003/08/21/20030821BIT00120/wkr0002.pdf The full report