Annual Report • Mar 31, 2010
Annual Report
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ANNUAL REPORT PART 1 H&M in words and pictures 2009
35 markets 1,988 stores 76,000 employees sales including VAT SEK 118.7billion profit after tax SEK 16.4 billion
H&M 2009 – page 5
Spring 2010 Divided
Blouse €14.90
H&M's growth targetis to increase the number of stores by 10–15 percent per year, but also to increase sales in comparable units. The growth, which is fully self-financed, will proceed with an emphasis on quality and continued high profitability.
values such as simplicity, continuous improvement, team spirit, cost-consciousness and entrepreneurship.
in-house designers create a wide and varied range for everyone who loves fashion. Quality is a central concept, right through from first idea to final customer. New items are offered to customers every day.
local H&M production offices in Asia and Europe. Products should be made under good working conditions and with the least possible impact on the environment.
is for every store to be in the best business location. H&M does not own any stores, but instead rents premises from both international and local landlords.
BUSINESS CONCEPT, GOALS AND STRATEGY H&M's business concept is simple: to offer fashion and quality at the best price. 11
CEO LETTER Karl-Johan Persson looks back on his initial exciting time as CEO and reflects on the future. 14
H&M 2009 IN BRIEF New concepts, stores, projects and collections – important events in the past year. 16
OUR COLLECTIONS Individual style and new materials inspired H&M's designers in 2009. 20
FROM IDEA TO STORE Creativity, sustainability and planning. How an H&M garment comes to life. 26
STORE OPENINGS In 2009 H&M arrived in new cities such as Moscow, Beijing and Beirut. 32
MEETING CUSTOMERS H&M stores should be inviting and inspiring. 36
OUR COLLEAGUES Committed employees are H&M's best asset. 42
OUR RESPONSIBILITY Consideration for the environment and people at every stage. 46
MARKETS & FIGURES H&M continues to grow. In 2009 there were stores in 35 markets. Financial information and key figures. 51
HISTORY In 1947 the first store opened in Västerås, Sweden. Today H&M is a global company with around 76,000 employees. 56
H&M in figures 2009 including the Annual Accounts and Consolidated Accounts
I t has been an eventful, educational and challenging year for H&M. We expanded substantially during 2009, opening stores in exciting new markets. Despite the influence of the economic downturn on sales, which did not quite live up to our expectations, we still enjoyed good profitability and gained valuable experience.
Our aim for the future is to provide our customers with an even better offering. We should always exceed our customers' expectations and we should do this by continuing to be creative and innovative and by constantly developing in every area.
From our business concept of "fashion and quality at the best price" H&M has grown since the start in 1947 into a fashion company with nearly 2,000 stores in 35 markets and around 76,000 employees. H&M is also one of the most valued brands in the world. Sales in 2009 reached SEK 119 billion and thanks to good cost control, profit for the year grew by a billion kronor to SEK 16.4 billion.
We have experienced fantastic development involving constant improvement, teamwork and a strong belief in people – some of our most important values – along the way. At H&M we all work togeth-
er to continuously give our customers
We are constantly striving to "
more fashion and quality for their money. It is also the H&M employees' ability to take the initiative that keeps the entrepreneurial spirit alive during the rapid expansion of H&M.
During the year, we opened 250 stores net in both existing and new markets. Russia and Lebanon are new additions
– the latter via franchise. We also opened our first H&M stores in Beijing and continued to grow in Tokyo and other major cities around the world. Paris and Barcelona got their first COS stores. Monki and Weekday opened in Germany and, through the start of H&M Home, we also
began to sell home textiles.
Many things have made a strong impression on me during my initial exciting period as CEO. I have had many interesting meetings with both customers and colleagues who have provided me with valuable insights and ideas for how we can raise our game to become even better at what we do.
The year was also full of challenges.The global financial crisis and recession, with more consumer restraint and discountdriven markets, naturally affected. However, we recognised that there were things we could have done better too.
Self-criticism and striving to make constant improvements are part of H&M's corporate culture and we work hard to become more efficient in all areas. Increased efficiency also means that we can invest in giving our customers an even more attractive offering.
recession of 2009 also created opportunities that we were able to take advantage of, thanks to our financial strength. This included finding more attractive store locations than we had initially anticipated. And, naturally, we will continue to take opportunities as they arise. However, the most important thing to us is that we expand with quality and at a pace that allows us to continue to operate H&M with high profitability. We always choose to do what is best for H&M and for our customers in the long term.
Our growth target is the same – to increase the number of stores by 10 to 15 percent per year with continued high profitability and at the same time increase sales within comparable units. In 2010 we plan to have a net addition of around 240 new stores.
On 27 February 2010, we opened the first H&M store in South Korea – a fullrange store on four floors in the best location in the Myeong-dong fashion district in Seoul. The response from customers has been fantastic, and the positive reception points to further opportunities in South Korea. It is an exciting market with high purchasing power and plenty
of people with an interest in fashion, just like in our other Asian markets, China and Japan.
Israel will become a new franchise market in 2010 with three store openings planned for spring in Tel Aviv, Jerusalem and Haifa. During the second half of the year, we will continue to expand in Russia with new stores in Moscow and St Petersburg. In autumn, we will open a new H&M store on the Champs Elysées in Paris, where we are working with the worldfamous architect Jean Nouvel.
Every year we open stores with new, updated interiors designed to attract and inspire our customers. We think long-term and invest a great deal in refurbishment
and freshening up stores as well as constantly creating exciting new store designs – all to ensure that our customers have an inspiring experience.
At the same time our other brands – COS, Monki, Weekday and Cheap Monday – are growing. Internet and catalogue sales, which are offered in seven countries, continue to expand and in autumn 2010 we plan to start internet sales in the UK. This will also make it possible for UK customers to shop from H&M Home.
Sustainability is part of our strategy. In order to secure H&M's future growth and continued high profitability it is important for us to run our business in a socially and environmentally sustainable manner. H&M does not own any factories. Our 16 production offices in Asia and Europe work closely with the 700 independent suppliers who make our products.
To us, sustainability goes hand in hand with our business concept: to offer fashion and quality at the best price. Quality is about ensuring that our products meet or exceed the expectations of our customers.
It also means that our clothes should be made and sold under good working conditions and with a limited impact on the environment.
In this way we can offer our customers even more value for money. As sustainability is strategically important at H&M, we decided to make these issues the responsibility of the whole company in 2009. We shifted the responsibility for environmental and social issues to each of the company's functions away from the Corporate Social Responsibility (CSR) department, which in turn will become a support function.
A great deal of improvement has been made since we started to work actively on sustainability in the supply chain in 1997. However, there is still a lot left to do, and we are greatly humbled by the challenge of what is needed to achieve long-term improvements.
Strong position. Although we recognise the seriousness of the current recession, H&M's business model has proven to be profitable even in tougher times.
Customer surveys conducted in all our markets show that we have strengthened our position from already high levels.
We have an attractive offering, exciting and commercial collections, a strong corporate culture and skilful employees the world over. There are many new cities and countries to take H&M to and I feel very optimistic about the future.
KARL-johan persson, CEO H & M Hennes & mauritz AB STOCKHOLM, 2010
Legendary accessories brand Jimmy Choo created in autumn 2009 a sophisticated, fashionable guest collection of shoes and accessories along with a capsule clothing range for men and women.
"The collection is full of fun, unique clothes and accessories with an accessible and glamorous identity made with luxury materials accented by colour and detail," said Jimmy Choo founder and president, Tamara Mellon, ahead of the launch.
From 14 November, thousands of eager customers were given the chance to discover the collection, which was sold in around 200 selected city stores.
Together with the Designers Against AIDS organisation, H&M is supporting the battle against HIV and AIDS. In 2009, some of the music world's most famous artists collaborated with H&M for the second year in a row to create a Fashion Against AIDS special Divided collection for boys and girls. Katy Perry, Dita Von Teese, N.E.R.D and Yoko Ono were among the artists to design colourful and graffiti-style prints on T-shirts, T-shirt dresses, vests and bodies in 100 percent organic cotton. The project was given 25 percent of the sales price to help raise awareness of HIV/AIDS. Over the year, the campaign, which also spreads a safe sex message to young people, raised SEK 16.4 million.
In 2009, H&M started All for Children with UNICEF to protect the rights of children in India living in areas where cotton is produced. All for Children includes a \$4.5 million donation from H&M over five years. The initiative is H&M's most extensive project with UNICEF to date and aims to give children the opportunity to go to school as well as improve their access to healthcare. H&M customers can contribute by buying a specially designed organic cotton bag in the stores, with 30 percent of the proceeds going to the project.
With the huge current interest in interiors and design, H&M launched H&M Home in February 2009. H&M Home is an interior textiles concept with sales via the internet and catalogue in Sweden, Norway, Denmark, Finland, the Netherlands, Germany and Austria. There has been a lot of interest from customers, and there are plans to start sales in the UK too, from autumn 2010.
H&M Home shares the same philosophy as H&M overall: everyone should be able to find something to suit their lifestyle at the best price. In collaboration with designers, artists and illustrators, H&M Home presented four collections in 2009.
On 25 September the H&M Home Showroom opened in Stockholm. It is a modern gallery where items from the interiors collections are presented in playful displays that are regularly updated and changed. Modern interiors blend seamlessly with fashion in the 200 square metre space. It is a place where customers can go for inspiration and to buy H&M Home items over the counter.
Colourful SUMMER WITH Matthew Williamson
The British fashion designer created a capsule women's collection which, with its bright colours, embroidery and lively patterns, got a fantastic reception when it was launched in around 200 H&M stores on 23 April, 2009.
Barely a month later, a more comprehensive summer collection for both men and women reached around 1,600 H&M stores.
"The whole collection was typical Matthew Williamson – wonderful colours and patterns exquisitely designed. The pieces also worked really well with H&M's own summer collections," said H&M's Creative Advisor Margareta van den Bosch, at the launch.
H&M 2009 – page 17
In October 2009, H&M opened its first stores in Lebanon. All three stores are situated in Beirut's most popular shopping district. The openings meant that by the end of the financial year H&M had stores in 35 markets – eight of which are in the Middle East where stores are run through franchise agreement.
H&M 2009 IN BRIEF
During the year the first Monki stores opened in Norway and Denmark. The store chains Monki and Weekday also opened their first stores outside Scandinavia, in Germany.
Both chains are run by H&M subsidiary FaBric Scandinavien AB, which also designs fashion under the Cheap Monday brand. Cheap Monday is sold in around 30 countries through some 1,500 retailers. The first Cheap Monday store in Copenhagen opened its doors in November 2009.
In 2009, store chain COS – Collection of Style – expanded into France and Spain. The first COS store in Paris sells women's, men's and children's clothes over three levels in the trendy Marais district. Barcelona also got its first COS store.
Like H&M, COS offers fashion and quality at the best price. With its modern, elegant and chic collections in a higher price segment, COS complements the H&M range. COS, which first opened in the UK in 2007, is now also available in Germany, the Netherlands, Belgium and Denmark. At the end of the financial year there were 23 COS stores, with plans to open a further twelve stores in 2010.
Japan got four new H&M stores in 2009, including a flagship store in the shopping and entertainment district of Shibuya in Tokyo. H&M arrived in Japan in 2008 and the opening of the first two stores was the most successful in the company's history. The positive response to the new stores one year on shows that interest continues and points to great opportunities for H&M in Japan in the future.
A guest collection of underwear from French fashion house Sonia Rykiel was launched in time for the Christmas season. Sonia Rykiel pour H&M was sold in 1,500 H&M stores as well as in eight of Sonia Rykiel's own boutiques all over the world from 5 December, 2009. With chic, playful underwear and accessories, the collection attracted strong interest from customers.
The collaboration between H&M and the fashion house, whose founder is called "The Queen of Knits", was followed up with a clothing collection for women and girls in the signature feminine, modern Parisian style of the Rykiel house. The collection – a knitted fashion parade – was released in around 200 H&M stores on 20 February, 2010.
In March 2009, Russia got its very first H&M store. The launch in the shopping and entertainment centre Metropolis attracted hundreds of customers. This very positive reception was followed by three more successful openings in the Moscow area: Mega Khimki, Mega Belaya Dacha, and Prospect Mira.
In November the doors to the first H&M store in St Petersburg opened and yet again many eager customers queued for the event.
With a population of 142 million, including 15 million in Moscow and the surrounding area, the Russian market is considered very interesting with great potential for longterm growth. By the end of the year, H&M had five stores in Russia.
In April 2009, the first much anticipated H&M store opened in Beijing. The full-range store is situated on the pedestrian street of Qianmen, in the centre of the Chinese capital near Tiananmen Square. At the opening, customers got the chance to buy the just-launched Matthew Williamson guest collection. H&M opened its first store in China in Shanghai in 2007, and had by the end of 2009 a total of 27 stores in the country, including Hong Kong.
FROM THE LATEST TRENDS TO THE MOST WEARABLE BASICS – there is something for everyone in H&M's collections. 2009 was a year of exciting innovations, such as colourful retroinfluences, new materials and individual expression.
What will H&M customers be looking for next season? This is a question Head of Design Ann-Sofie
Johansson and her colleagues are constantly asking themselves. They start the hunt for inspiration way ahead of every season.
"When we interpret the season's trends, it's important to have as wide a range of influences as possible. We get inspiration from travel, visiting fairs and flea markets, reading blogs and browsing through fashion magazines," she says.
H&M has fashion for everyone – from modern basics to the very latest trends, from children's collections for the youngest, through to women's and men's clothes for fashion-conscious adults. In between are Divided, the jeans concept &denim, and popular designer collaborations. Fashion is not just about clothes – it includes everything from accessories and underwear to footwear and cosmetics. From spring 2009 H&M offers fashion for the home too, with the H&M Home collection.
H&M HAS MANY in-house designers who as a team, including patternmakers and buyers, create the H&M collections. Together with the design responsibles of H&M's various concepts, Ann-Sofie Johansson works out several directions – the season's main trends.
"For example, we can have one romantic,
one ethnic and one tailored main trend. In recent years we have also created a futuristic line, with experimental designs," says Ann-Sofie.
The main trends run through the entire range and are sold in all H&M markets. This means the different concept teams – consisting of designers, buyers, assistants, patternmakers, section heads and budget controllers – begin from the same starting point but translate the main trends into different types of garments for their concept and their customers.
Some of the key trends for 2009 were the ethnic, decorative Wilderness, and the sharp, slightly rock-influenced Power. Unexpected combinations, individual expression and new materials were highlighted.
A fresh focus on materials produced some inspiring results. Classic raw materials such as wool, cotton and leather were given new types of treatment.
"New textures were created by using new weaving techniques and raw materials, such as metallic yarn, which felt exciting this year," says Ann-Sofie.
Trends often extend over several seasons. New trends can appear, only to disappear
Ann-Sofie Johansson, Head of Design
for a while before coming back.
"
"One example is the strong or very wide shoulders that made a real breakthrough this year," says Ann-Sofie.
Wide shoulders came into fashion in the 1980s, the decade which is also the source of 2009's retro influences.
"There have been attempts at an 80s fashion comeback for several years, without any real success. However, this year, things took off with the emergence of both pastel shades and neon brights. In denim fashion, higher waistbands appeared on jeans, and worn, light denim became popular again."
Fashion is not just about the new and
Divided Exclusive, a special collection within the Divided range, offered a luxury biker look in 2009. Thanks to sophisticated and exclusive materials, such as silk velvet, sequins, and real suede and leather, the collection exuded both glamorous 80s and elegant 90s style.
H&M offers fashion from top to toe, and footwear is the perfect accessory to complement personal style and set off an outfit. H&M's footwear is displayed with the collections for women, men, teenagers and children.
experimental – it is also about neverending attention to details.
"We update our basics regularly. A neckline moved up or down a few centimetres can make all the difference to a jersey top feeling here and now," says Ann-Sofie.
2009 WAS FULL of exciting new fashions for customers of all different ages in all different styles. One of the most written about collections was the all-black, slightly more luxurious autumn range in Divided Exclusive, with both 80s and 90s influences. Materials were sophisticated and exclusive, such as silk velvet, silk, sequins and real suede and leather.
An exciting new garment for women and girls was the glamorous and comfortable all-in-one, which became a key spring/summer piece. Chinos were a trend item for men and boys – preferably worn with the legs rolled up. Knits were big across all departments in autumn and winter with the introduction of new stitching techniques and innovative designs.
Organic cotton and recycled materials are being used in more and more H&M garments. In 2009 for example, H&M had men's suits and shirts made entirely from organic cotton in the Modern Classics concept. In spring another children's organic collection was launched. The year also saw designer collaborations with Matthew Williamson and Jimmy Choo and, for Christmas, an underwear collection with Sonia Rykiel:
"Sonia Rykiel is such a distinctive designer that as soon as I see a stripe I think of her," says Ann-Sofie. "And just like H&M, she stands for fashion being fun and not being taken too seriously."
PARALLEL WITH colourful 80s fashion and trends such as Wilderness and Power, H&M is looking along more minimalist lines for 2010 and 2011. When Ann-Sofie thinks of the future, she talks of stylish, elegant fashion.
"I think we will see a change when it comes to skirt lengths. Super-short will dominate for a while longer, at least over summer 2010. Then hemlines will creep down to below the knee, and gradually even further down. This is an example of a wider trend: we are heading for a more grown-up look."
H&M 2009 – H&M 2009 – SIDA 21 page 21
OUR COLLECTIONS
H&M 2009 – SIDA 22
The menswear collections contain classic tailoring to modern basics, leisurewear, and the current season's fashion reflecting the very latest trends. They also include coordinating accessories, underwear and footwear.
OUR COLLECTIONS Items containing organic cotton are available in every department.
The womenswear collections are aimed at fashion-conscious women of all ages. The wide range contains everything from modern basics to tailored classics, leisurewear, sportswear, Big is Beautiful, maternity wear, and the very latest trends. The collections are complemented with coordinating accessories, underwear and footwear. Children
The children's range is divided into different concepts for babies (0-18 months), children (1½-8 years) and H&M Young (9-14 years). H&M has extra high quality standards when it comes to children's clothes. The collections are as fashionable as they are practical, hardwearing, safe and comfortable.
H&M's cosmetics department offers a comprehensive range of make-up alongside skin and bodycare products. The range is updated continually with new colours, fragrances and products to reflect fashion trends. H&M does not permit animal testing on any of its cosmetic products – either in the production process or on the finished product. All suppliers have to guarantee that all contents, packaging and labelling fulfil EU quality and safety standards.
The jeans concept &denim offers everything from traditional five-pocket jeans to trendy fashion jeans. In 2009 the &denim collection was expanded with additional pieces, such as denim shirts, jackets, dresses, skirts and shorts.
Divided offers fashion in a youthful style. The range is made up of street-style fashion for every occasion – from everyday to partywear – complemented by coordinating accessories, footwear and underwear.
H&M 2009 – SIDA 23
Monki is a clothing brand, a store concept – and a whole universe to fashionconscious women. Today there are stores in large and medium-sized cities in Sweden, Denmark, Norway and Germany.
At Weekday, customers can find urban fashion for boys and girls from in-house brands Cheap Monday and MTWTFSS. In 2008 Weekday opened in Copenhagen, Denmark – the first store outside Sweden. Since 2009, there has also been a Weekday store in Hamburg, Germany.
COS combines the quality and fashion focus of prêt-à-porter fashion with lower price levels. Like H&M, COS offers fashion and quality at the best price, but within a higher price segment. The first store opened in London, UK in 2007. Today there are also COS stores in Belgium, Denmark, France, the Netherlands, Spain and Germany.
H&M 2009 – SIDA 24 Cheap Monday started as a jeans brand in 2004, but has since 2005 been a full-range concept.Through approximately 1,500 retailers in 30 countries, customers are offered young fashion with an urban attitude comprising a high fashion element at low prices. In 2009 the first Cheap Monday store opened in Copenhagen, Denmark.
H&M Home – fashion for the home – is an interior textiles concept for the bedroom, bathroom, living room and kitchen sold via mail order and internet shopping in Sweden, Norway, Denmark, Finland, the Netherlands, Germany and Austria, and through a showroom in
" I think it's an amazing collaboration and I think H&M makes really great choices in the designers they pick and Matthew Williamson is a given for H&M." Helena Christensen, model and photographer
"I like the idea of very stylish things that people can get at affordable prices. For us it's taking high and low and mixing it all together. We have kids so it's functional when you need something quick and cute wherever you are." Gabrielle Reece, volleyball professional and model
"I do my shopping sprees at H&M. I was recently in Italy and instead of going to other stores, I went to H&M." Hayden Panettiere, actress
"I've always been a big fan of Sonia Rykiel. To me she is so feminine, and so wonderfully dramatic, like a big glittery bow on a dress." Kate Bosworth, actress
"I shop at H&M all the time. When I am on the road there's always an H&M." Sheryl Crow, musician
"I love when designers like Jimmy Choo – they're so exclusive – can do something that people can actually afford to get. I think it's very cool. I am a huge Jimmy Choo fan and I do shop at H&M, that's why it's exciting to have both." Sasha Alexander, actress
FROM MOOD BOARD TO WARDROBE FAVOURITE. The story of an H&M garment involves creativity, planning and sustainability considerations. We follow one of all the garments created every year by H&M.
DUCTS TO SUIT OUR CUSTOMERS." I Tina Felixon, buying department n January 2010, a light grey tunic lands in the women's department of H&M's flagship store in Stockholm. Meanwhile, similar tunics are being unpacked in other H&M stores – from Tokyo in the east to San Francisco in the west.
In a wide cut with an ethnic floral pattern on a softly draping, slightly transparent material, the tunic is on trend for spring. The seed of the design was sown much earlier when the H&M design team started gathering inspiration for the season. Travel, films, exhibitions, street fashion, blogs, magazines and museum visits – influences come from many sources. H&M's designers are in touch with customers to find out what is in demand.
For spring 2010, the inspiration has been filtered down into key trends such as All American, Green Garden and the ethnically influenced Global Traveller. The inspiration material for Global Traveller included colourful folklore patterns, style icons such as the Mexican actress María Félix, the 60s freedom movement, craftsmanship, cowboys & indians, jetset lifestyle, and films such as Easy Rider and Ang Lee's Woodstock.
"For every concept we have to translate key trends into products to suit our customers," says Tina Felixon, one of the section responsibles in the buying department. "We look at important pieces – in this case tunics, narrow bottoms and short jackets – and choose materials, colours and patterns that feel right for the trend and the season."
From the choices made, H&M's product designers and patternmakers develop clothes and accessories. Meanwhile, intensive evaluation work is going on in production offices in Asia and Europe. H&M does not own any factories, instead working with independent suppliers who manufacture all the products.
"When we get an indication that there's going to be huge demand for a garment, we have the capacity to make large quantities," says Karl Gunnar Fagerlin, Head of Production. "Our business concept is to supply fashion and quality at the best price. We strive for long-term relationships with our suppliers. When it comes to production rate, delivery reliability, efficiency and price, we work with our suppliers to create production plans spanning several years."
Production offices are also responsible for ensuring that all products are made under good working conditions, as well as with limited impact on the environment.
"H&M's Code of Conduct applies to all our suppliers and we inspect every factory," says Karl Gunnar. "For those suppliers who don't manage to meet all the requirements
Tina Felixon of the buying department with her team.
"
In the White Room library at H&M's Head Office in Stockholm – one of the many sources of inspiration.
of the code, we work together to draw up an action plan to achieve improvements. In the long term we always expect suppliers to fulfil every requirement of the Code of Conduct."
H&M, like its customers, has high standards when it comes to quality.
"
"It is a fundamental condition that all suppliers must comply with H&M's quality standards – it's non-negotiable," says Karl Gunnar.
Production planning is done by the production offices in collaboration with the buying department in Stockholm, where the season's collection is designed, planned and quantified.
"Samples are made from our sketches, which we then evaluate as a team," says Tina. "We sift things out and give each other feedback, and it's far from every idea that goes through to become a finished garment that ends up in our stores. The team does a final check of the samples that have come through the sifting process. Then the design is complete. But before production can begin, sample garments are also checked by the production offices, which do thorough tests on things like shrinkage, colourfastness and chemical content."
To ensure that products are manufactured under good working conditions and comply with H&M's environmental standards, auditors visit suppliers often, and carry out regular unannounced inspections of their premises.
"It's important that the inspections work like a wake-up call for us and our suppliers," says Karl Gunnar. "Things can always be improved, and we work with proactive suppliers who want to achieve good results with us."
New garments arrive at H&M's around 2,000 stores daily. They are packed, folded and labelled in the countries where they are produced. When they leave the suppliers, they are transported via distribution centres to the various stores.
"The focus of H&M's logistics work is always the store. There are merchandisers on site in every country and it is their planning that governs our process," says Logistics Manager Danny Feltmann.
The right quantity of tunics must be in the right place at the right time. They come ready-folded for the shelf with a price tag
Tracy Jiang and Carxiu Dong carry out quality control checks.
and size label and are supplied with other garments in the Global Traveller collection.
Sustainability is a key word in logistics. Environmental considerations are reflected in the method of transport chosen and the requirements – such as for environmentally friendly cars – are high. In 2009, H&M reduced its air freight by 5 percent.
"We try to ensure that as many products as possible are transported by rail," says Danny.
It is important that there are efficient procedures in the stores when it comes to fitting rooms and replenishment. Everything has to run smoothly for both customers and staff.
"Regardless of whether the store is in Frankfurt or on Fifth Avenue, procedures are the same," says Danny. "That's because we have listened to our store colleagues, they are our store experts. We've learnt from them and always implement what they think works best."
The light grey tunic should be easy to coordinate with other items from the Global Traveller trend, as well as with other items of the range.
"The tunic is a key item for the trend and obviously we hope it will be a key item for our customers too," says Tina.
The colour palette ranges from earth
tones including black, grey, khaki and redbrown, to neon brights. For everyday wear, for example, the tunic will look good with a short black jacket with shoulder pads and a pair of leggings in grey – one of this year's base colours. Together, these pieces create a relaxed, everyday silhouette that will suit lots of customers.
With the wide range on offer, the possibilities are endless. H&M stores are constantly replenished with new stock. The light grey tunic could instead be teamed with a pair of shiny black harem pants, with a wide belt around the waist and chunky, ethnicinspired jewellery. These simple steps transform it from a relaxed, everyday piece to an on-trend party outfit.
"Everybody can style garments together in different ways and create their own look. H&M has something for everyone," says Tina Felixon.
The establishment strategy has been the same since 1947: it is always the best business location that counts.
H&M is expanding and establishing stores in new parts of the world. As new stores are opening their doors, others are being renovated, while interiors and displays are constantly updated. H&M's establishment strategy has been the same since 1947: it is always the best business location that counts.
"OUR GLOBAL growth strategy is for each individual store to strengthen the H&M brand while also contributing to increased sales and profitability," says Head of Expansion Stefan Larsson. "Our focus is always on the individual store."
One important development this year was the establishment in Russia. On 13 March the then CEO, Rolf Eriksen, opened H&M's first store in Moscow in the Metropolis shopping centre, as hundreds of people queued outside. A week later a second store opened in the Mega Khimki shopping centre, just outside Moscow. And in the autumn H&M also arrived in St Petersburg.
H&M does not own any store premises, which gives the company flexibility.
"The retail trade is constantly developing. The best business location today will not necessarily be the best tomorrow. Limited tenancies mean we can keep up with developments by always being in the best location."
H&M also has great flexibility when it
In 2009, H&M stores opened in exciting cities such as Moscow, Beijing and Beirut. Comprehensive refurbishments were carried out on stores including the big flagship stores on Fifth Avenue, New York; Boulevard Haussmann, Paris; Oxford Circus, London and Drottninggatan, Stockholm. COS opened its first stores in Paris and Barcelona, while the first Weekday and Monki stores opened in Germany. The first Monki stores also opened in Norway and Denmark. H&M Home was launched via internet and catalogue sales, and got its very own showroom in Stockholm.
comes to different sizes, layouts and floor plans of its premises. It means a unique H&M store can be created around the individual conditions of each location to meet the demands of local customers. Larger buildings contain full-range stores with products designed to appeal to a wider customer base.
"Our strength is that we have a wide range and many different concepts. The various departments for women, men, teenagers and children are our foundation. We can work with them in different types of buildings, street locations and shopping centres with very different characters," says Stefan.
One example is the 3,000 square metre store in Shibuya – Tokyo's centre for young, fashion-conscious trendsetters – which opened in September 2009. The area's urban character and Tokyo's fast pace are reflected in a totally new building. Behind the dramatic facade with huge glass sections are four floors full of playful interiors and new display solutions.
H&M's relationships with landlords are about close, long-term cooperation, with H&M contributing added value to all parties.
"The fact that we attract a lot of customer traffic to our stores is one of the reasons behind our lucrative growth. This means more customers for surrounding businesses, which creates added value for landlords," says Stefan Larsson.
H&M's expansion is rapid and running parallel on four continents. Many potential projects are running simultaneously and competing with each other.
"There are considerably more opportunities for new openings than the stores that we actually do open," says Stefan Larsson. "During the establishment process we decide against some potential stores. Only the best business opportunities remain. The aim is for us to create the best H&M stores through a combination of best location and best possible business conditions, wherever we are in the world."
Karl-Johan Persson and Store Manager Kenichi Minamiura open the Shibuya store.
H&M arrives in Beijing.
23 April, Beijing
H&M 2009 – page 34
18 September, Shibuya, Tokyo
THE STORE IN SHIBUYA – TOKYO's CENTRE FOR YOUNG, FASHION-CONSCIOUS TREND-SETTERS – OPENED IN SEPTEMBER 2009
23 April, Beijing
AN IMPORTANT EVENT THIS YEAR WAS THE OPENING OF H&M's FIRST STORE IN THE METROPOLIS SHOPPING CENTRE IN MOSCOW
Re-opening 14 November, Fifth Avenue, New York
Maja Hellspong, store development architect, and Camilla Henriksson, who is responsible for store display.
H&M STORES SHOULD BE INSPIRING AND INVITING. Their interior design and displays create an overall impression that communicates what H&M is offering to customers.
Stores are H&M's most important channels of communication. "When you step into one of our stores you should get an immediate H&M
experience – a sense of what H&M is all about," says Maja Hellspong, a store development architect for H&M. "You should feel that fashion is fun, simple and inspiring."
Together the products, shop floors, displays and staff make up the whole package that communicates H&M's business concept of fashion and quality at the best price. The interior and displays should inspire and communicate what H&M has to offer, and help customers to find what they are looking for.
"It should be easy to surf between the different concepts in an H&M store. Fash"Conveying the H&M feeling isn't just about having a nice store," says Camilla. "A good display should inspire and invite, just like the clothes and the rest of the store. We do a lot of work on the presentation of clothes, styling mannequins inside the store, and on the display windows to show customers the breadth of our fashion range. In autumn, a window might be filled with clothes in an earthy colour palette with a decor of red and yellow autumn leaves for one period, and then with different denim styles the next. We regard constantly changing the look of our stores and display windows and surprising customers as an important part of the whole store experience."
ALL H&M STORES should boost the company's global brand, while also being individually adapted to suit their location. In the new flagship store in Shibuya, Tokyo, the city's skyline has been drawn by the famous illustrator Lovisa Burfitt on a huge feature wall:
"The graphics appear on every floor, which gives the whole store a playful and individual character," says Maja.
"The overall impression was enhanced even further by displays, where the mannequins were given a very special look for the opening, with facial features and makeup in vinyl, and wigs in different styles," says Camilla.
IN 2009, SUSTAINABILITY was a major consideration. H&M's store architects follow strict rules on the use of materials, how they are transported and what happens to them when they finally have to be replaced. PVC, for example, is a substance that isn't used at all.
"We have a high level of customer traffic in the stores, so it's important to use materials that age well and wear in a beautiful way. We work with looks that last over time and can be updated with small changes," says Maja. Often sustainability and aesthetics do coincide:
"This is relevant to lighting, for example. In recent years we have put a lot of effort into reducing energy use with measures such as energy-efficient light fittings. Lower lighting levels save energy, and it's also interesting to work with light and shade
– it guides the eye around the store and puts the clothes firmly in focus."
Fashion illustrator Lovisa Burfitt's illustrations in Shibuya, Tokyo.
H&M 2009 – page 36
H&M STORES OFFER new items every day. Displays are changed regularly and adapted to suit seasons and trends, while pictures and details from the current season's campaigns
reappear in the stores.
ion is a world without rules where different garments and styles can be mixed freely," says Camilla Henriksson, who is responsible for the display department. "Our job is to make this possible for our customers in the best way, while clearly displaying what we believe in through our collections."
PLACEMENT, PRESENTATION AND STYLING. H&M's visual merchandisers help customers find what they want.
Emelie Klingstedt is a visual merchandiser in one of H&M's Stockholm stores. With a feel for fashion and interiors, a sense of what will sell, careful planning and the ability to make quick decisions, she works hard to get the most out of product presentation.
"I work to make displays of H&M products inspiring and attractive. Customers should recognise an H&M store wherever they are in the world. We follow a basic plan, but we also have to be flexible and creative and be able to style mannequins in new ways, or reposition garments in the stores so that customers can discover how the clothes can be mixed and matched and feel 'I would really like to buy this'. I also train store colleagues in visual merchandising. We rehang departments to fit in with different trends, and I help with everything from working at the cash desk to unpacking products."
"Together with colleagues from different countries, I helped out with building up the departments in a new store for a couple of weeks. I brought lots of tips and ideas home as well as being able to teach our new colleagues in Japan how we work with different departments and concepts."
"To redesign a department with new trends and colour combinations and know that we have succeeded in creating the right feel in the store."
MEETING CUSTOMERS
"WHEN YOU STEP INTO ONE OF OUR STORES YOU SHOULD GET AN IMMEDIATE H&M EXPERIENCE – A SENSE OF WHAT H&M IS ALL ABOUT"
Maja Hellspong, Architect
Drottninggatan, Stockholm
NAMe Sara Mendez Perez age 24 city Madrid DESCRIBE YOUR PERSONAL STYLE I would probably call it fresh and relaxed. WHAT DO YOU THINK OF THIS H&M STORE?It's so big you could almost get lost in it! WHAT IS IN THE BAG? A black oversized T-shirt. DO YOU OFTEN SHOP AT H&M? Yes, I do. WHAT DO YOU USUALLY BUY? Dresses and skirts.
NAMe Raphaël Jabol age 21 city Bobigny DESCRIBE YOUR PERSONAL STYLE I don't have a particular style – I like to mix traditional brands with more subcultural design. I like taking things from both the men's and women's collections and mixing influences from different styles, such as rock and hip-hop with more traditional garments. WHAT DID YOU BUY TODAY? I found an oversized blue top. HAVE YOU VISITED HM.COM? Yes, I have. HAVE YOU BOUGHT ANYTHING FROM THE GUEST COLLECTIONS? Yes, I bought a suit by Matthew Williamson. And I'm thinking about buying a suit and boots from the Jimmy Choo collection.
NAMe Sayo Yamabe age 21 city Tokyo, visiting Paris. HOW OFTEN DO YOU SHOP AT H&M? This is the first time. HAVE YOU BOUGHT ANYTHING? Yes, I found a pair of trousers and a pair of leggings. DID YOU SEE ANYTHING ELSE YOU LIKED IN STORE? There were some lovely scarves and more leggings. DO YOUR FRIENDS SHOP AT H&M? Yes, the friends I came here with today bought some trousers and cardigans.
NAMe Jin Bae 44 with Allison 14 and Gene 10 city New York HOW OFTEN DO YOU SHOP AT H&M? Lots. Both for the children and myself. All the clothes I'm wearing today are from H&M. WHAT IS YOUR FAVOURITE H&M GARMENT? I often buy jeans and I like thin, windproof jackets, like the one I'm wearing today. DO YOU KNOW ABOUT H&M's DESIGNER COLLABORATIONS? Yes! My favourite was the Stella McCartney guest collection.
NAMe Charlotte von Mentzer age 33 city Stockholm DESCRIBE YOUR PERSONAL STYLE Boho chic or classic - it depends on the occasion and my mood on the day. DO YOU OFTEN SHOP AT H&M? Yes, nearly every week. WHAT IS YOUR FAVOURITE H&M GARMENT? Right now it's a gold cocktail dress. WHY DO YOU SHOP AT H&M? Because I can always find the latest trends at a reasonable price. DO YOU KNOW ABOUT H&M's COLLABORATION WITH JIMMY CHOO? Yes, of course. I bought a pair of leather trousers and a leopard print scarf.
Thanks to internet and catalogue sales, customers can now shop at H&M 24 hours a day, every day of the
week. Today H&M offers internet and catalogue sales in the Nordic countries as well as in the Netherlands, Germany and Austria. In autumn 2010 internet sales will be launched in another important market – the UK. The hm.com website
is constantly updated with new items, inspiration
material and information about what H&M has to offer. Many items that are part of the new season's range are available online before they reach the stores. Parts of the range are presented in H&M catalogues, which are published several times a year. The catalogues and webshop work as a source of inspiration both for customers who shop online and for those who prefer to go to a store.
Shopping on hm.com is quick. Clear pictures, product descriptions and measurement details make it easy to choose from the range. The website also provides a visual overview of the season's trends and new items.
In 2009, H&M saw a positive development in internet and catalogue sales. A new addition is the home textiles range, H&M Home – fashion for the home – which is initially being sold through internet and catalogue sales. Since September 2009, many items have also been shown and sold in the new H&M Home showroom in Stockholm, directly over the counter.
I love fashion and like to keep up with what's happening. I usually try to adapt the trends so that I can keep the clothes I buy for several seasons. It's important that my clothes are comfortable. WHAT HAVE YOU BOUGHT TODAY? Some fun pyjamas that look like a dinner jacket – they're a present for
AT H&M? Every month. There's a store near to where I work – it's irresistible! WHY DO YOU SHOP AT H&M? Because the clothes are cool
and the prices are unbeatable.
PERSONAL RESPONSIBiLITY, CURIOSITY AND AN UNPRETENTIOUS PROFESSIONALISM. It is the employees and their ability to take the initiative that keep the entrepreneurial spirit alive – and make H&M an attractive employer.
The H&M Group now has around 76,000 employees. Driven by curiosity, customer focus and a desire for constant improvement, employees are H&M's best asset.
In other words, H&M is not just about a successful business concept. The corporate culture – summed up by the "H&M spirit" – has been a major factor in enabling H&M to grow into one of the world's largest fashion companies with around 2,000 stores in 35 markets, and at the same time enjoy high profitability.
The H&M culture is based on believing in people and their ability to act on their own initiative, test the boundaries and have the courage to put forward any ideas they may have. These are the very same values on which H&M was once founded. Straightforwardness, unpretentiousness and team spirit are encouraged, as well as common sense and cost-consciousness. And, not least, trying to avoid all forms of bureaucracy.
"Sales are what we live on, not administration," says Sanna Lindberg, Head of Human Resources since autumn 2009.
"We delegate a great deal of responsibility. Those who work in a store should feel like it is their store."
Freedom with responsibility is not just relevant to H&M stores – it applies to every aspect of the company.
"We give people guidelines and frameworks, but within these they can move freely. We would rather they took the initiative than get everything right every time. Sometimes mistakes are made
H&M's values
but the most important thing is to learn from them."
Work rotation and internal recruitment are also used to keep the entrepreneurial spirit alive while H&M is expanding at such a rapid rate. Sanna Lindberg's background including a summer job in store and being a store manager, buyer and marketing manager, and with experience from a handful of countries, most recently as country manager for the US proves that there are numerous opportunities
to develop within H&M.
"We want people to get breadth before becoming an expert. People should also feel that they can grow within H&M, rather than leaving the company to try different jobs," she says.
In a world where competition for staff is increasing, H&M must continue to be a good employer and an attractive place to work. H&M has global policies for diversity and equality and against discrimination. H&M has positive experiences from
Sanna Lindberg, Head of Human Resources
an open and constructive dialogue with trade unions and welcomes such relation-
Employees at the Canton Road store, Hong Kong.
THE H&M CULTURE IS BASED ON BELIEF IN PEOPLE AND THEIR ABIL-ITY TO ACT ON THEIR OWN INITIA-TIVE, TEST THE BOUNDARIES AND HAVE THE COURAGE TO PUT FOR-WARD ANY IDEAS THEY HAVE." "
ships everywhere the company operates. H&M has had a global agreement with the worldwide union federation, Union Network International (UNI), for several years. H&M also has an active European Works Council with union representatives from a number of European countries. Even in countries with laws and regulations that do not live up to H&M's values, the company's business should be characterised by basic respect for the individual. H&M's requirements are not limited to the requirements of the national law and often go further.
In 2010 H&M will continue to grow in existing markets and will enter South Korea and Israel. In total, H&M is planning a net increase of around 240 new stores in 2010.
Sanna Lindberg stresses the importance of leadership in this expansion:
"We must support everyone in order to discover our stars and future leaders. As a manager it's important to see the people around you and help them develop. It's up to you as a manager to encourage them to grow."
H&M 2009 – page 43 H&M 2009 – SIDA 43
"H&M is expanding in Russia, so right now most of my work involves recruiting staff for our stores. Training and development of colleagues who meet customers every day is part of this too."
"Being part of building up a business from the start while also being part of a large fashion company where there are opportunities to try different jobs. The special thing about H&M is that you can communicate openly and solve problems in different ways."
"Internal recruitment is very important in a country like Russia where new companies are fighting for staff and people change jobs the minute a different company offers them a bit more money. I want to raise awareness that people who start working at H&M will have exciting opportunities in an interesting industry."
Name Michael Feldman jobSales Advisor City New York
"I work in a city store where the pace is fast. My job is to give customers the best possible service, help them to find the right garments and show them how to mix and match clothes and accessories to suit their personal style. During the day I do everything from unpacking products to manning the fitting rooms, working at the cash desk and making sure the store and clothes look attractive. I also train new colleagues on how to help customers find the size, style or colour of garments that are right for them."
"I was working in a store for another company in Manhattan when I came into contact with H&M. It felt exciting to get the chance to work with fashion. I had heard a little about H&M, and soon realised it's a company that is open to your ideas and initiatives."
"Absolutely! It would be really exciting to get the chance to work at the Head Office in Stockholm."
What do you do at the production office in Shanghai?
"
"We coordinate production in the region including China, Indonesia, Viet-
nam and Cambodia. It's our responsibility to make sure that H&M products are made in the best way. H&M does not produce anything itself, but instead works with a large number of independent suppliers."
everyone contributes with their different experience, and we need that because the challenges we face are many and varied."
Halide Alagoz
desh before moving back to Turkey to work as Production Office Manager. I came to China two years ago and right now I have two roles: Production Office
Manager and Global Product Manager."
"The people – everyone contributes with their different experience, and we need that because the challenges we
Describe your path to your present job? "I come from Turkey and I've worked at H&M for twelve years. My first job was in the production office in Istanbul, then I had a couple of exciting years in Bangla-
face are many and varied. We try to see every challenge as an opportunity to improve what we do. At the same time, we have to work at a fast pace and it's important we have fun together too."
"My team and I are responsible for merchandising in Central Europe and we work for both buying and selling. We plan so that the right quantities of the right products are in the right place at the right time and at the right price."
"I love the competitive element and I keep a close eye on sales developments. To be able to work with my team focusing on delivering 'fashion and quality at the best price' in the best way possible for our customers and then see the results in the form of increased sales – that inspires me."
"We're growing rapidly and that puts pressure on us to remain flexible. We have to make sure that everything we do continues to serve the customer in the best way."
Sustainability will play an important role in H&M's future growth and profitability. Consideration for people and the environment is key in every aspect of the business.
At H&M sustainability goes hand in hand with the company's business concept: to offer fashion and quality at the best price. Quality is not just about products meeting or exceeding customer expectations. It is also about them being made under good working conditions and with limited impact on the environment. In this way H&M can offer customers even more value for money.
"It should feel better for people to buy and wear clothes from H&M, thanks to our sustainability work, and it should make
them want to come back," says Björn Magnusson, who is responsible for H&M's business development.
Proximity to the product means sustainability plays a strategically important role in H&M's future growth and continued profitability. It also means that all functions within the group must take on their own responsibility for how people and the environment are affected by the business.
That is why H&M introduced a new sustainability strategy in 2009. The strategy, initiated the year before, is based on shifting the responsibility for environmen-
tal and social issues to each and everyone of the company's functions and away from the central Corporate Social Responsibility (CSR) department, which in turn will become a support function.
Head of CSR, Ingrid Schullström has been working with sustainability for H&M since 1997. She describes the transfer of the responsibility for sustainability as "a mental journey":
"It's about new ways of thinking – about making sustainability part of our everyday decision-making process, rather than a new plan of action. All functions should feel that they own the issue and that the ideas are their own."
In its social responsibility – People – H&M prioritises working conditions and human rights, the environment and safety at work as well as for customers, and ethics. On the environmental side – Planet
– issues concerning water, waste and the climate are prioritised, together with the sustainable use of natural resources. Profit – refers to the fact that H&M must be costconscious at every stage.
H&M strives to expand its sustainability work by exerting influence further down the value chain, i.e. through the product's complete life cycle – from production of raw materials to customers taking care of
IT'S ABOUT NEW WAYS OF THINKING – ABOUT MAKING SUSTAINABILITY PART OF OUR EVERYDAY DECISION-MAKING PROCESS." "
Ingrid Schullström, Head of CSR
their purchase to finally disposing of it. Traditionally, H&M's CSR focus has been on the value chain's most central links: production, transport and sales, which is natural for a fashion company with stores in 35 markets, 16 production offices and around 700 independent suppliers.
H&M's sustainability work has come furthest on the production side. H&M does not own any factories but has for many years had its own auditors to check that suppliers comply with the company's Code of Conduct and environmental standards. (Read more about quality work in the manufacturing of H&M's products in the "From Idea to Store" article, page 26.) Ingrid Schullström says a large number of improvements have been made by suppliers since 1997 when H&M introduced the code.
"But there's still a lot left to do. We want to help and motivate our suppliers to take over the responsibility for respecting human rights and offering good working conditions themselves. Achieving longterm improvements is a challenge we are humbled by."
H&M strives for constant improvement on all levels. Sometimes it is not enough for sustainability thinking to be part of each function's decision-making processes. Some larger initiatives can influence several functions. Such issues can be resolved in the Green Room. Just like in the White Room of H&M's design department and the Red Room of the marketing department, discussions in the Green Room are ultimately about fashion and quality at the best price. One difference, however, is that it is not possible to actually visit the Green Room since it is not a room in the normal sense. In reality it is a decision-making forum where the CEO, Head of CSR and those responsible for the functions involved make decisions in line with H&M objectives. H&M's goal is to run a business that is sustainable in the long term.
"By making sustainability a natural part of daily work for all employees, the profitability of sustainability work increases – for customers, H&M, the environment and for the societies we work in," says Björn Magnusson.
The earth's climate is changing, which affects us all. Efforts to cut carbon dioxide emissions are an important part of H&M's environmental work. In the fight against global warming, the next few years are critical, which is why in December 2009 H&M set new targets for cutting the company's carbon dioxide emissions by 2012. Emissions are to be reduced by 5 percent per year in three years relative to sales, which compares to the earlier target of 2 percent per year, or a total of 10 percent, in the five-year period from 2005 to 2009. The results will be published in April 2010 in the H&M Sustainability Report 2009 at www.hm.com/csr.
H&M works for increased energy efficiency and aims to reduce energy consumption in stores by at least 20 percent per square metre by 2020 compared to 2007. The company is also striving to use "green" electricity with the aim of ensuring that 20 percent of all energy bought comes from renewable sources by 2020.
As H&M grows, so does the importance of climate-smart transport. Air freight is sometimes the only option, but as it has the greatest impact on the environment H&M is trying to find other alternatives or combine it with sea freight. The preferred method of land-based transport is by train.
BAGS MADE FROM RECYCLED PLASTIC mean lower energy consumption, reduced emissions and greater cost efficiency.
Madelene Ericsson is an environmental coordinator at H&M, supporting colleagues who work on developing products surrounding
"From the perspective of an entire life cycle, our research showed that recycled plastic has less of a negative effect on the environment than paper and materials such as starch-based plastic. But the best thing a consumer can do from an environmental perspective is to re-use the bag several times and then finish by using it for refuse."
"For every kilo of plastic that is recycled, around one litre of oil and two kilos of carbon dioxide are saved."
"Measures have included replacing our three-pack bags for men's underpants with packaging in recyclable plastic. The packaging as a whole weighs a third of what it did previously and each component – bag, hook and tuck-in label – is easy for customers to take apart and recycle. The price is also lower. It's often the case that if you save resources, you save both the environment and money."
Is plastic the only material H&M is looking at, or are there similar initiatives for other materials?
"We have just completed a major review of all the paper we use in the sale of H&M products. We are documenting our paper consumption so that we can see what we need to do in order to use it as sustainably as possible."
Stores in Sweden and the new markets South Korea and Israel were the first countries to start using H&M's new recycled plastic bags in February and March 2010. The bags – made from 50 percent waste plastic and 50 percent remnants from the manufacture of plastic products – will gradually replace the old bags, and be introduced country by country.
H&M's business will be run in a manner that is financially, socially and environmentally sustainable. This includes the sustainable use of natural resources. By switching to bags made from recycled plastic, H&M is contributing to reducing the use of fossil fuels as well as lowering energy consumption and therefore reduced carbon dioxide emissions. At the same time it is using waste as a resource.
COTTON IS USED TO MAKE MANY OF H&M'sGARMENTS, and most of the world's cotton is grown in developing countries.
Although H&M is not a cotton buyer, the company is working to ensure that rights are respected and working conditions improved, not just at H&M's suppliers, but also further back in the value chain.
H&M does not accept the use of child labour by any of its suppliers, and works to help prevent child labour within the cotton growing industry too. That is why H&M set up All for Children together
with UNICEF in 2009. The collaboration aims to protect children's rights in the cotton-producing areas of India and includes a \$4.5 million donation from H&M over five years. The initiative is H&M's most extensive project with UNICEF to date, and aims to give children the opportunity to go to school as well as improve their access to healthcare.
H&M customers can contribute by buying a specially designed organic cotton bag in store, with 30 percent of the proceeds going to All for Children.
H&M has worked with UNICEF on various issues since 2004. In the same year, H&M also started working through the Better Cotton Initiative (BCI) to reduce the negative social and environmental impact of conventional cotton growing.
A small but increasing ratio of H&M garments are made from organically grown cotton and labelled "Organic Cotton". Demanding more organic cotton is one way in which H&M can help to reduce the environmental impact of cotton growing and integrate sustainability further back in the value chain.
OUR SUSTAINABILITY POLICY
H&M's business concept is to offer fashion and quality at the best price. Quality also means that the products have to be manufactured in a way that is environmentally and socially sustainable. Like all H&M's activity, our CSR work is based on a drive for continuous improvement.
We have a responsibility towards everyone who contributes to our success, including those who are not employees of H&M. That is why we work closely with our suppliers to develop a long-term, sustainable social and environmental standard in the factories that manufacture H&M's products.
We have to ensure that our employees' human rights are not violated, and the same applies to employees of our suppliers and other cooperation partners, and to our customers.
We apply the precautionary principle in our environmental work and have adopted a preventative approach with the substitution of hazardous chemicals.
We strive to use resources as efficiently as possible and to minimise waste. By adopting new technologies and methods, we can work preventatively to minimise our environmental footprint through improved production processes and our choice of materials. We must continuously review the company's goals and strategies to reduce the company's climate impact.
Our decisions are based on careful consideration, where shorter or longer-term environmental benefits are weighed up in order to ensure that we choose solutions which are sustainable in the long term.
We want to be a good global citizen and act responsibly in our business relations. We take a clear stand against all forms of corruption. We engage in dialogue with all our various stakeholders to build trust in our operations within the environment we rely on for our long-term success.
H&M has updated its Code of Conduct. Like its 1997 predecessor, the new code, which came into force on 1 January 2010, is based on the UN Convention on the Rights of the Child and the International Labour Organisation's Declaration on Fundamental Principles and Rights at Work.
The code has been updated to reflect experiences over the last twelve years, and the new standards that are required. Above all there have been developments on environmental issues, the concept of suppliers has broadened, and the way we do business with suppliers has changed into more of a dialogue. Read more on www.hm.com/csr
H&M's Sustainability Report is available on www.hm.com/csr. It gives a detailed review of the most important aspects of H&M's sustainability work during 2009, including information on carbon dioxide emissions, and on the progress made in water consumption and treatment. The report also outlines the audits of suppliers' factories carried out by H&M over the year.
– H&M only accepts products made in wool from angora rabbits from breeders with good animal husbandry.
– H&M does not accept down that has been plucked from live birds. H&M only accepts down, feathers and decorative feathers taken from slaughtered birds that have been bred for meat production.
– H&M does not accept mulesing.
– H&M does not allow products made from shells from endangered species.
– H&M does not allow silk originating from India, because of the poor working conditions in the Indian silk industry.
– H&M does not allow products made in wood from endangered species. For products made from wood sourced in countries with tropical rainforest, H&M requires a certificate from the Forest Stewardship Council (FSC).
The above points are an extract from H&M's product policy, which you can read in its entirety on hm.com
Despite having a well-developed system for product safety, occasionally products that fall short of H&M's standards reach stores. There is a special recall procedure to ensure that these products can be rapidly recalled. In 2009 no products were recalled.
An unsafe product is identified.The quality department and production managers decide on a global recall.
Sales are stopped immediately in all markets, and the relevant authorities are informed. Immediate information is sent internally to colleagues and customers, through channels such as newspaper adverts, the internet and signs in store.
The quality department analyses what has happened in order to prevent it from happening again.
CLEANWATER IS A COMMODITY THAT IS IN SHORT SUPPLY for many people and a priority area in H&M's sustainability strategy.
For this reason H&M has signed the CEO Water Mandate, a voluntary initiative that requires H&M to improve and openly report how efficiently both
H&M and its suppliers use water and treat wastewater.
To tackle the increasing shortage of clean water – caused by factors such as the inefficient use of water, pollution and climate change – H&M places demands on suppliers. H&M requires suppliers whose processes involve dyeing and washing to work actively to minimise their water consumption and ensure that they have proper water treatment methods in place.
Every year H&M designs a special swimwear collection where 10 percent of the sales price is donated to the charity WaterAid, which runs projects aimed at finding long-term solutions to improve the lives of some of the poorest people in the world. In 2009 the collection was expanded to include swimwear for men and children too.
During 2009, H&M customers contributed by buying swimwear from the WaterAid collection so that H&M was able to donate £400,000, equivalent to around SEK 4.6 m, to water and sanitation projects in Asia.
Knitted beret €4.95
H&M expanded considerably in 2009 with a net addition of 250 new stores. By the end of the financial year H&M was present in 35 markets. Two new markets – Russia and Lebanon – were added during the year, the latter on a franchise basis. H&M also opened its first stores in Beijing and continued to grow in Tokyo and other big cities around the world. At the end of the financial year, the H&M Group had a total of 1,988 stores including 36 franchise stores, 23 COS stores, 35 Monki stores, 10 Weekday stores and one Cheap Monday store.
The Group's total sales increased by 14 percent to SEK 118.7 billion including VAT. In local currencies sales increased by 4 percent, while sales in comparable units – i.e. the stores and internet and catalogue sales countries that have been in operation at least one financial year (1 December–30 November) – fell by 5 percent. Sales were negatively affected by the recession due to consumer restraint and discount-driven markets.
Internet and catalogue sales, currently offered in Sweden, Norway, Denmark, Finland, the Netherlands, Germany and
Austria, developed well during the year and will be expanded into the UK where internet sales will begin in autumn 2010. H&M Home – fashion for the home – which was launched in February 2009 will also become available to customers in the UK market in autumn 2010.
In 2009 H&M expanded in almost all markets, but the main expansion was in Germany, the UK, France, the US and Italy. In Russia, a new market for H&M, four stores were opened in Moscow and one in St. Petersburg. More store openings in Russia are planned for 2010.
H&M is optimistic about future expansion and business opportunities. New markets in 2010 are South Korea with the first store opening in Seoul on 27 February and another planned for the autumn, and Israel which will be a new franchise market with store launches in Tel Aviv, Jerusalem and Haifa in the spring. A net addition of 240 stores is planned for 2010, including 12 COS and 25 Monki and Weekday stores. H&M plans to expand in all of its markets with an emphasis on the US, the UK, China, France, Germany and Italy.
Sales including VAT per country and number of stores, financial year 1 December - 30 November
| MARKET | year estABLISHED |
no. of stores 30 nov 2009 |
new stores during the year |
closed stores during the year |
sales 2009 including vat (sekm) |
sales 2008 including vat (sekm) |
|---|---|---|---|---|---|---|
| Sweden | 1947 | 161 | 15 | 4 | 7,881 | 7,444 |
| Norway | 1964 | 92 | 8 | 1 | 5,598 | 5,290 |
| Denmark | 1967 | 77 | 12 | 4 | 4,254 | 3,867 |
| UK | 1976 | 167 | 24 | 3 | 7,564 | 7,337 |
| Switzerland | 1978 | 73 | 7 | 6,042 | 4,879 | |
| Germany | 1980 | 362 | 31 | 8 | 30,069 | 25,487 |
| Netherlands | 1989 | 103 | 7 | 7,402 | 6,793 | |
| Belgium | 1992 | 61 | 7 | 1 | 3,502 | 3,122 |
| Austria | 1994 | 63 | 5 | 2 | 5,503 | 5,020 |
| Luxembourg | 1996 | 9 | 411 | 351 | ||
| Finland | 1997 | 38 | 2 | 2,543 | 2,450 | |
| France | 1998 | 135 | 21 | 8,455 | 7,988 | |
| USA | 2000 | 189 | 20 | 7,487 | 6,513 | |
| Spain | 2000 | 114 | 15 | 6,285 | 5,778 | |
| Poland | 2003 | 65 | 12 | 2,466 | 2,508 | |
| Czech Republic | 2003 | 19 | 4 | 1 | 667 | 670 |
| Portugal | 2003 | 20 | 3 | 928 | 764 | |
| Italy | 2003 | 64 | 19 | 1 | 3,616 | 2,675 |
| Canada | 2004 | 52 | 9 | 2,190 | 1,812 | |
| Slovenia | 2004 | 10 | 1 | 615 | 594 | |
| Ireland | 2005 | 11 | 2 | 557 | 488 | |
| Hungary | 2005 | 10 | 2 | 306 | 304 | |
| Slovakia | 2007 | 4 | 1 | 187 | 137 | |
| Greece | 2007 | 15 | 7 | 480 | 301 | |
| China | 2007 | 27 | 14 | 1,614 | 881 | |
| Japan | 2008 | 6 | 4 | 1,111 | 198 | |
| Russia | 2009 | 5 | 5 | 373 | ||
| Franchise1) | 2006 | 36 | 18 | 5912) | 390 | |
| Total | 1,988 | 275 | 25 | 118,697 | 104,041 |
1) United Arab Emirates, Kuwait, Qatar, Saudi Arabia, Egypt, Bahrain, Oman and Lebanon. 2) Excluding VAT.
At the end of the financial year the H&M Group had a total of 1,988 stores of which: 23 COS stores, 35 Monki stores, 10 Weekday stores and one Cheap Monday store. 36 H&M stores are operated as franchises in the Middle East.
H&M offers fashion in stores, on the internet and through catalogues. There are H&M stores in 35 markets. Internet and catalogue sales are offered in Sweden, Norway, Denmark, Finland, the Netherlands, Germany and Austria.
In 2009, 275 stores were opened and 25 were closed. This makes a net addition of 250 stores.
New markets in 2009 were Russia and Lebanon.
H&M buys products from around 700 independent suppliers through 16 production offices in Asia and Europe.
Since 2003, sales including VAT have increased by 110 percent and profit after tax by 157 percent.
| Key ratios | 2009 | 2008 |
|---|---|---|
| Sales including VAT, SEK m | 118,697 | 104,041 |
| Sales excluding VAT, SEK m | 101,393 | 88,532 |
| Change, % | +15 | +13 |
| Operating margin, % | 21.3 | 22.7 |
| Profit after financial items, SEK m | 22,103 | 21,190 |
| Profit for the year, SEK m | 16,384 | 15,294 |
| Earnings per share, SEK (before and after dilution) | 19.80 | 18.48 |
| Change, % | +7 | +13 |
| Return on equity, % | 42.2 | 44.3 |
| Return on capital employed, % | 56.7 | 61.1 |
| Share of risk-bearing capital, % | 78.5 | 75.7 |
| Equity/assets ratio, % | 74.7 | 72.1 |
| Total number of stores | 1,988 | 1,738 |
| Average number of employees | 53,476 | 53,430 |
* Since IPO 1974.
I N 1947 HENNES WOME N ' s C L OTHI NG ST ORE OPE NED I N VÄSTERÅS, S WEDE N. H & M H ennes & Mauritz AB is an i nter national fashion company with ar o u n d 2,000 st ores on f our conti n e nts .
The first store opens in Västerås, Sweden, selling women's clothing. The store is called Hennes.
Hennes opens in Stockholm.
The first store outside Sweden opens in Norway.
Founder Erling Persson buys the hunt ing and fishing equipment store, Mauritz Widforss. Sales of men's and children's clothing begin. The name is changed to Hennes & Mauritz.
H&M is listed on the Stockholm Stock Exchange.
The first store outside Scandinavia opens in London, the UK.
Impuls stores are launched. Sales of cosmetics begin.
Stores open in Germany and the Netherlands. H&M acquires the mail order company, Rowells.
Progress continues in Europe. Adverts in newspapers and magazines are com plemented by billboards using famous models. In 1998 internet sales begin.
The first store to open in the US is on Fifth Avenue in New York. In the same year stores open in Spain. In subse quent years, H&M opens in many new European markets.
H&M initiates designer collaborations starting with Karl Lagerfeld. Further collaborations include Stella McCartney, Viktor & Rolf, Madonna, Roberto Cavalli, Comme des Garçons, Matthew Williamson, Jimmy Choo and Sonia Rykiel.
A major expansion of internet and catalogue sales begins with the Netherlands as the first market outside Scandinavia. The first franchise stores are opened.
The first Asian stores open in Hong Kong and Shanghai. In the same yea r, the new store concept, COS
– Collection of Style, is launched. Internet and catalogue sales expand with the addition of Germany and Austria.
H&M opens in Tokyo, Japan. H&M ac quires the fashion firm FaBric Scandinavien AB with Weekday, Monki and Cheap Monday.
The first store opens in Russia. H&M opens in Beijing and Lebanon gets its first franchise stores. H&M Home is launched. Weekday and Monki open their first stores in Germany. Karl-Johan Persson takes over as CEO.
-
The first store opens in South Ko rea. Israel becomes a new franchise country. Internet and catalogue sales expand further with the launch of internet sales in the UK.
H & M Hennes & Mauritz AB Mäster Samuelsgatan 46A 106 38 Stockholm Sweden Tel: +46 (0)8 796 55 00
For information about H&M and addresses of the country offices, please see www.hm.com
CEO Karl-Johan Persson FINANCE Jyrki Tervonen ACCOUNTS Anders Jonasson SALES Jonas Guldstrand BUYING Madeleine Persson DESIGN Ann-Sofie Johansson PRODUCTION Karl Gunnar Fagerlin CORPORATE SOCIAL RESPONSIBILITY Ingrid Schullström EXPANSION Stefan Larsson BUSINESS DEVELOPMENT Björn Magnusson BRAND AND NEW BUSINESS Jörgen Andersson MARKETING Anna Tillberg Pantzar COMMUNICATIONS Kristina Stenvinkel INVESTOR RELATIONS Nils Vinge HUMAN RESOURCES Sanna Lindberg IT Kjell-Olof Nilsson LOGISTICS Danny Feltmann
The H&M Annual Report 2009 comes in two parts: Part 1: H&M in words and pictures 2009, and Part 2: H&M in figures 2009 including the Annual Report and Consolidated Accounts.
H&M sends out the printed version of Parts 1 and 2 to shareholders who have specifically expressed an interest in receiving the printed version. The Annual Report is also available to read and download at www.hm.com
PhotographY Camilla Åkrans modeL Natasha Poly garment Dress, H&M Garden Collection
www.hm.com/annualreport
ANNUAL REPORT PART 2 H&M in fi gures 2009
including the Annual Accounts and Consolidated Accounts
| Administration Report including proposed distribution of earnings4 – 9 | |
|---|---|
| Group Income Statement10 | |
| Group Balance Sheet11 | |
| Group Changes in Equity12 | |
| Group Cash Flow Statement13 | |
| Parent Company Income Statement14 | |
| Parent Company Balance Sheet15 | |
| Parent Company Changes in Equity16 | |
| Parent Company Cash Flow Statement17 | |
| Notes to the Financial Statements18 – 30 | |
| Signing of the Annual Report.31 | |
| AUDITORS' REPORT32 | |
| FIVE YEAR SUMMARY33 | |
| CORPORATE GOVERNANCE REPORT INCLUDING THE BOARD OF DIRECTORS35 – 45 |
|
| THE H&M SHARE46 | |
| FINANCIAL INFORMATION AND CONTACT DETAILS47 |
The annual report on H&M's operations in 2009 is in two parts: Part 1 is H&M in words and pictures 2009 and Part 2 is H&M in fi gures 2009 including the Annual Accounts and Consolidated Accounts.
The Board of Directors and the Managing Director of H & M Hennes & Mauritz AB (publ), 556042-7220, domiciled in Stockholm, Sweden, herewith submit their annual report and consolidated accounts for the fi nancial year 1 December 2008 – 30 November 2009.
The Group's business consists mainly of the sale of clothing and cosmetics to consumers.
H&M's business concept is to offer fashion and quality at the best price. According to H&M's expansion principle, every store is to have the best commercial location. The business is operated from leased store premises, through internet and catalogue sales and on a franchise basis. At the end of the fi nancial year, H&M was present in 35 markets and the operations in eight of these are on a franchise basis. The total number of stores at the end of the fi nancial year was 1,988, of which 36 are franchise stores, 23 are COS stores, 35 are Monki stores, ten are Weekday stores and one is a Cheap Monday store. Internet and catalogue sales are offered in Sweden, Norway, Denmark, Finland, the Netherlands, Germany and Austria. The new home textile range, H&M Home, is sold via internet and catalogue and at a showroom in Stockholm.
Focusing on the customer, H&M's own designers work with pattern designers and buyers to create a broad and varied range for the fashion conscious. H&M's own design and buying department creates the collections centrally. To ease the fl ow of goods, H&M is increasingly using the concept of regional grouping. This means that products are purchased and distributed to a group (region) of sales countries. The products are then allocated to the sales countries in the region according to demand in each market.
To facilitate this regional grouping and support the considerable ongoing expansion, the Group structure went through a review and restructuring process in 2007. Among other things, this process involved transferring the central design, buying, logistics and stock-keeping functions to a separate company, H & M Hennes & Mauritz GBC AB, as of 1 June 2007. This company owns the products until they are delivered to the stores. At the same time, the production unit in Hong Kong was reinforced and made into a central procurement department for the Group. This resulted in a new internal pricing model within the Group, the full effect of which was realised in 2008.
H&M does not own any factories but instead outsources product manufacturing to around 700 independent suppliers through H&M's 16 local production offi ces in Asia and Europe. To guarantee the quality of the products and that manufacturing takes place under good working conditions, H&M works in close cooperation with the suppliers. The production offi ces are responsible for ensuring that orders are placed with the correct supplier, that the products are manufactured at the right price and are of good quality, and that they are delivered at the right time. The production offi ces also check that manufacturing takes place under good working conditions. H&M's own auditors check that the suppliers live up to H&M's environmental requirements
and high standards with respect to the employment terms of the suppliers' employees. H&M applies the company's Code of Conduct for long-term improvements for employees of the suppliers who manufacture the company's products.
Tests, such as chemical and laundry tests, are carried out on a continuous basis at the production offi ces and at external laboratories. The goods are subsequently transported by sea, rail, road or air to various distribution centres. From there the goods are distributed directly to the stores and/or to central regional replenishment centres.
The best price is achieved by having few middlemen, buying in large volumes, buying the right product from the right market, being cost-conscious in every part of the organisation and having effi cient distribution processes.
H&M acts in many markets as both a buyer and a seller. This requires H&M to act responsibly and in a sustainable way with respect to the environment and social responsibility. The head of environment and corporate social responsibility issues has been a member of the executive management team for around ten years.
One area of focus is to develop sustainable materials and production methods, such as using organic cotton. H&M's sustainability strategy involves incorporating sustainability work into day-to-day routines in all areas of the company's operations.
The company publishes a sustainability report every year. The report is available at www.hm.com/csr.
H&M's business is characterised by a fundamental respect for the individual. This applies to everything from fair pay, reasonable work hours and freedom of association, to the opportunity to grow and develop within the company. The company's values
– the spirit of H&M – which have been in place since the days of H&M's founder, Erling Persson, are based, among other things, on the ability of the employees to use their common sense to take responsibility and use their own initiative.
H&M has grown signifi cantly since its beginnings in 1947 and at the end of the fi nancial year had around 76,000 employees. The average number of employees in the Group, converted to fulltime positions, was 53,476 (53,430), of which 4,874 (4,924) are employed in Sweden.
Around 79 percent of the employees were women and 21 percent were men. Women held 77 percent of the positions of responsibility within the company, such as store managers and country managers.
The Group opened 275 (234*) stores and closed 25 (18) stores during the fi nancial year. Of the new stores, 18 (8) were opened on a franchise basis. The rate of expansion has been high; there was a net addition of 250 (216) stores during the fi nancial year,
* including 13 Monki stores and 7 Weekday stores which were added through H&M's acquisition of FaBric Scandinavien AB.
which is 25 more than originally planned. The increase in the number of stores added compared to what was originally planned is largely due to the economic downturn which provided opportunities for new store projects, and to the fact that a number of store contracts scheduled for the fi rst quarter of 2010 were completed earlier than planned, allowing these stores to be opened in the fourth quarter of 2009.
Russia and Lebanon became new H&M markets during the year. The fi rst stores in Moscow opened in the spring, while the fi rst franchise stores in Beirut opened during the autumn and were very well received. The opening of H&M's fi rst stores in Beijing was another example of successful establishments during the year.
The proportion of refurbished stores remained at the same high level as the previous year. The investments and costs associated with new and refurbished stores calculated per unit were lower than the previous year.
H&M works continually on developing its offering to the customer. In 2009 H&M continued to develop internet and catalogue sales and concepts such as COS, Monki, Weekday and H&M Home.
Internet and catalogue sales developed well during the year. H&M Home – fashion for the home – which was launched in February 2009 via internet and catalogue sales channels was well received. In 2009 H&M Home's offering was complemented by a showroom on Drottninggatan in Stockholm where customers can purchase products directly.
During the year, the store chains Weekday and Monki opened their fi rst stores outside Scandinavia, in Germany. During the year 19 Monki stores were opened and one was closed. Two Weekday stores were opened and the fi rst Cheap Monday store was opened in Copenhagen in the autumn.
The COS – Collection of Style – brand offers a collection for women, men and children in a higher price segment. Ten stores were opened in 2009 and at the end of the fi nancial year, there were 23 COS stores in total in the UK, Germany, the Netherlands, Belgium, Denmark, France and Spain.
Sales excluding VAT increased during the fi nancial year by 15 percent compared to the previous year and amounted to SEK 101,393 m (88,532). The H&M Group's sales including VAT amounted to SEK 118,697 m (104,041), an increase of 14 percent. In local currencies the increase was 4 percent and in comparable units sales decreased by 5 percent.
The gross profi t for the fi nancial year amounted to SEK 62,474 m (54,468), equivalent to 61.6 percent (61.5) of sales.
After deducting selling and administrative expenses, the operating profi t amounted to SEK 21,644 m (20,138). This represents an operating margin of 21.3 percent (22.7).
The operating profi t for the fi nancial year has been charged with depreciation of SEK 2,830 m (2,202). The Group's net fi nancial income amounted to SEK 459 m (1,052).
Profi t after fi nancial items was SEK 22,103 m (21,190), an increase of 4 percent compared to the previous year.
The Group's profi t for the fi nancial year after applying a tax rate of 25.9 percent (27.8) was SEK 16,384 m (15,294), which represents earnings per share of SEK 19.80 (18.48) and an increase of 7 percent.
The profi t for the year represents a return on shareholders' equity of 42.2 percent (44.3) and a return on capital employed of 56.7 percent (61.1).
The sales increase during the year was weak, which is deemed to be due to several factors; mainly the recession and restrained consumption and the fact that the market has been discountdriven.
In a time of signifi cant exchange rate fl uctuation, H&M's policy* of hedging the mark-up on internal sales of goods to the subsidiaries had a major impact – both negative and positive – on the gross margin in the year's different quarters. There was a total negative effect of approximately SEK 370 m on gross profi t during the fi nancial year, which is equivalent to a negative effect of 0.4 percentage units on the gross margin. Despite this, the company achieved a gross margin of 61.6 percent (61.5) mainly due to greater surplus capacity among suppliers and more effi cient buying processes.
Cost control within the Group was successful throughout the fi nancial year. Selling and administrative expenses increased by 18.9 percent. In local currencies the increase was 9 percent, which is entirely related to the company's expansion. Selling and administrative expenses in relation to sales excluding VAT increased to 40.3 percent (38.8), which is mainly explained by weak sales during the year. Costs in comparable stores, which were adjusted effectively for the recession, were lower than the previous year.
The 20 percent increase in stock-in-trade compared to the same period the previous year is largely explained by the company's expansion and the fact that sales in the fourth quarter were lower than planned. As sales were weak during the fourth quarter, the stock-in-trade as of 30 November 2009, contains a larger proportion of mainly weather-dependent garments compared to the same period the previous year. This will lead to larger markdowns during the fi rst quarter of 2009/2010 and thereby affect the gross margin negatively compared to the same quarter the previous year.
* For information about the amended currency hedging policy, see page 6.
The tax rate for the 2008/2009 fi nancial year was 25.9 percent (27.8). On 1 January 2009 the Swedish corporate tax rate was reduced to 26.3 percent from its previous level of 28 percent. In autumn 2009 it was made clear that the new, lower Swedish corporate tax rate would begin to affect the Group already in the 2008/2009 fi nancial year. The tax expense for the year was thus SEK 225 m lower than originally estimated.
For the full year 2009/2010 the tax rate is expected to be 26 percent.
The parent company had no external sales (136) during the fi nancial year. Profi t after fi nancial items amounted to SEK15,267 m (15,395). Investments in fi xed assets amounted to SEK -94 m (-185).
The Group's total assets had increased as of 30 November 2009 by 6 percent, amounting to SEK 54,363 m (51,243).
The Group's cash fl ow for the fi nancial year amounted to SEK -3,607 m (5,292). Current operations generated a positive cash fl ow of SEK 17,973 m (17,966). The cash fl ow was affected by, among other things, dividends of SEK -12,825 m (-11,584), investments in fi xed assets of SEK -5,686 m (-5,193), and shortterm fi nancial investments with a term of four to twelve months amounting to SEK -3,001 m (4,900). Liquid funds and shortterm investments amounted to SEK 22,025 m (22,726).
Stock-in-trade increased by 20 percent compared to the same date the previous year and amounted to SEK 10,240 m (8,500). This represents 10.1 percent (9.6) of sales excluding VAT. Stockin-trade accounted for 18.8 percent (16.6) of the total assets.
The Group's equity/assets ratio was 74.7 percent (72.1) and the percentage of risk-bearing capital was 78.5 percent (75.7).
Shareholders' equity shared between the outstanding 827,536,000 shares as of 30 November 2009 equalled SEK 49.08 (44.65).
In 2009 the longest investment period was 12 months. The Group does not use any derivative instruments in the interest-bearing securities market, nor does the Group trade in shares or similar instruments. See also Note 2, Financial risks.
H&M's growth target is to increase the number of stores by 10 – 15 percent per year while maintaining high profi tability and at the same time increase the sales within comparable units. H&M remains positive towards the future expansion and the company's business opportunities. For the 2009/2010 fi nancial year a net addition of around 240 stores is planned, 25 of which will be Monki and Weekday stores and 12 will be COS stores. Most of the new stores will be in the US, the UK, China, France, Germany and Italy. The refurbishment of existing stores is expected to remain at the same high level as in 2008/2009.
As previously communicated, the following store openings are planned for 2010:
The fi rst store in Seoul, South Korea will be launched in the spring and the second in the autumn of 2010.
Israel will be a new franchise market in 2010 and the fi rst three stores are planned to open in the spring in Tel Aviv, Jerusalem and Haifa.
H&M is planning to start internet sales in the UK in autumn 2010.
H & M Hennes & Mauritz AB changed its internal transfer pricing model within the Group in the second half of 2007. This involved, among other things, the introduction of currency hedging for the mark-up on the internal sales of goods to the subsidiaries in order to secure part of the Group's gross earnings in Swedish kronor.
During a time of signifi cant exchange rate fl uctuation in the autumn of 2008 and spring of 2009, the currency hedging for the mark-up of internal sales of goods to the subsidiaries had a major impact, both negative and positive, on the gross margin in different quarters of the year. To avoid such effects in the future, the company has decided to end the hedging of the internal mark-up with effect from 1 December 2009 and thereby return to the previous practice of applying currency hedging for the Group's fl ow of goods only. Although the currency hedging for the internal mark-up to the subsidiaries ended as of 1 December 2009, there are outstanding forward contracts that were entered into before 1 December 2009 and that will mature in the fi rst half-year 2009/2010. This means that the majority of the internal mark-up for the fi rst quarter is currency-hedged, which is expected to have a positive impact on the gross margin based on current exchange rates. For the second quarter, a somewhat smaller proportion of the internal mark-up is currency-hedged and is therefore estimated, at current currency rates, to have a more limited effect on the gross margin than in the fi rst quarter of 2009/2010.
During the year the part of the Group's fl ow of goods (around 10 percent) that was not currency-hedged had an impact on the gross margin that varied substantially in the various quarters due to rapid and signifi cant exchange rate fl uctuation. In order to decrease such effects in the future the company has therefore also, with effect from 1 December 2009, decided to apply currency hedging for 100 percent of the Group's fl ow of goods instead of 90 percent as previously.
At the Annual General Meeting on 4 May 2009 a resolution for guidelines for remuneration of senior executives within H&M in accordance with the Swedish Companies Act was approved. The guidelines below are effective until the 2010 Annual General Meeting.
The term "senior executives" covers the Managing Director, other members of the executive management team, country managers and certain key individuals. The number of individuals covered by the term senior executives is currently around 40.
Compensation to senior executives is based on factors such as work tasks, expertise, position, experience and performance. Senior executives are compensated at competitive market rates. H&M has a presence in more than 30 countries and therefore levels of compensation may vary between countries. Senior executives receive a fi xed salary, pension benefi ts and other benefi ts such as car benefi ts. The largest portion of the remuneration consists of a fi xed salary. For information on the variable portion, see the section below.
In addition to the ITP plan, the executive management team and certain key individuals are covered either by a defi ned benefi t or a defi ned premium pension plan. The retirement age for these individuals is between 60 and 65 years of age. Members of executive management and country managers employed by a subsidiary abroad are covered by local pension arrangements as well as a defi ned benefi t pension plan. The retirement age for these is in accordance with local retirement age rules. The cost of these commitments is partly covered by separate insurance policies.
The period of notice for senior executives varies between three and twelve months. No severance pay agreements exist within H&M other than for the Managing Director.
The retirement age for Managing Director Rolf Eriksen is 65, which he reaches in autumn 2009. During the fi rst three years of his retirement, Rolf Eriksen will receive a pension equivalent to 65 percent of his fi xed salary followed by a lifetime pension equivalent to 50 percent of the same salary.
Managing Director Rolf Eriksen, country managers, certain senior executives and certain key individuals are included in a bonus scheme. The size of the bonus per person is based on 0.1 percent of the increase in the dividend approved by the Annual General Meeting and the fulfi lment of targets in their respective areas of responsibility. The maximum bonus per person and year has been set at SEK 0.3 m net after tax. Net after tax means that income tax and social fees are not included in the calculation. In the case of the Head of Sales, the bonus is based on 0.2 percent of the dividend increase, with a maximum of SEK 0.6 m net after tax. For Managing Director Rolf Eriksen, the bonus is 0.3 percent of the dividend increase up to a maximum of SEK 0.9 m net after tax. The bonuses that are paid out must be invested entirely in shares in the company which must be held for at least fi ve years. Since H&M is present in markets with varying personal income tax rates, the net model has been chosen because it is considered fair that the recipients in the different countries should be able to purchase the same number of H&M shares for the amounts that are paid out. The future Managing Director may be covered by the bonus scheme according to the principles and within the parameters outlined above.
In individual cases other members of executive management, key individuals and country managers may, at the discretion of the Managing Director and the Chairman of the Board, receive one-off payments up to a maximum of 30 percent of their fi xed yearly salary.
The Board of Directors may deviate from these guidelines in individual cases where there is a particular reason for doing so.
See below for the Board's proposals to the 2010 AGM.
The term "senior executives" covers the Managing Director, other members of executive management, country managers and other key individuals. The number of individuals covered by the term senior executives is currently around 40.
Compensation for senior executives is based on factors such as work tasks, expertise, position, experience and performance. Senior executives are compensated at what are considered by the company to be competitive market rates.
H&M is present in more than 30 countries and the levels of compensation may therefore vary from country to country. Senior executives receive a fi xed salary, pension benefi ts and other benefi ts such as car benefi ts. The largest portion of the remuneration consists of the fi xed salary. For information on variable components, see the section below.
In addition to the ITP plan, executive management and certain key individuals are covered by either a defi ned benefi t or defi ned contribution pension plan. The retirement age for these individuals varies between 60 and 65 years. Members of executive management and country managers who are employed by a subsidiary abroad are covered by local pension arrangements and a defi ned contribution plan. The retirement age for these is in accordance with local retirement age rules. The cost of these commitments is partly covered by separate insurance policies.
The period of notice for senior executives varies from three to twelve months. No severance pay is payable within H&M, except in the case of the Managing Director.
The retirement age for the Managing Director is 65. The Managing Director is covered by the ITP plan and a defi ned contribution plan. The total pension cost shall not exceed a total of 30 percent of the Managing Director's fi xed salary. The Managing Director is entitled to 12 months' notice. In the event the company cancels the employment contract, the Managing Director will receive severance pay of an additional year's salary.
The Managing Director, country managers, certain senior executives and certain key individuals are included in a bonus scheme. The size of the bonus per person is based on 0.1 percent of the increase in the dividend approved by the Annual General Meeting and the fulfi lment of targets in their respective areas of responsibility. The maximum bonus per person and year has been set at SEK 0.3 m net after tax. Net after tax means that income tax and social fees are not included in the calculation. In the case of the Head of Sales, the bonus is based on 0.2 percent of the dividend increase, with a maximum of SEK 0.6 m net after tax. For the Managing Director, the bonus is 0.3 percent of the dividend increase up to a maximum of SEK 0.9 m net after tax. The bonuses that are paid out must be invested entirely in shares in the company, which must be held for at least fi ve years. Since H&M is present in markets with varying personal income tax rates, the net model has been chosen because it is considered fair that the recipients in the different countries should be able to purchase the same number of H&M shares for the amounts that are paid out.
In individual cases other members of executive management, key individuals and country managers may, at the discretion of the Managing Director and the Chairman of the Board, receive one-off payments up to a maximum of 30 percent of their fi xed yearly salary.
The Board of Directors may deviate from these guidelines in individual cases where there is a particular reason for doing so.
The total number of shares in H&M is 827,536,000, of which 97,200,000 are class A shares (ten votes per share) and 730,336,000 class B shares (one vote per share). Class A shares are not listed. Ramsbury Invest AB, of which the principal owner is Stefan Persson, holds all 97,200,000 class A shares which represent 57.1 percent of the votes, and 3,200,000 class B shares which represent 0.2 percent of the votes. In addition, Stefan Persson holds 186,274,400 class B shares which represent 10.9 percent of the votes. This means that, in total, Stefan Persson personally or through companies holds 68.2 percent of the votes and 34.6 percent of the total number of shares.
A number of factors may affect H&M's results and business. Most of these can be dealt with through internal routines, while some are infl uenced more by external factors. There are risks and uncertainties related to fashion, weather conditions, climate change, trade interventions and foreign currencies, but also in connection with expansion into new markets, launching new concepts, changes in consumer behaviour or how the brand is managed.
Operating in the fashion industry is a risk in itself. Fashion is a perishable item and there is always a risk that a part of one of the collections will not be well received by the customers.
Within each concept H&M must have the right volumes and achieve the right balance in the mix between fashion basics and trend items. To optimise fashion precision, H&M buys items on an ongoing basis throughout the season.
The purchasing patterns are relatively similar in the various markets, although differences do exist. The start of a season and the duration of a season may, for example, vary from country to country. Delivery dates and product volumes for the various countries are therefore adjusted accordingly.
H&M's products are purchased and launched in stores on the basis of normal weather patterns. Major deviations from normal conditions may affect sales. The effect is the greatest if there is a major deviation at the beginning of a season.
There is also a risk that changes in the global economy may change consumer purchasing behaviour. It is therefore important to be aware of such changes and to have a fl exible buying model that can be adjusted to different market conditions.
There is a risk that H&M's business may be affected by future regulation and increased costs, e.g. in the form of emissions trading and carbon taxes in H&M's various sales markets. These can essentially be regarded as competition-neutral. The risks that may arise as a result of climate change and natural disasters primarily in production countries can be considered as very limited bearing in mind H&M's fl exible business model which can be adapted quickly to changed circumstances.
Buying costs may be affected by decisions at the national level on export/import subsidies, customs duties, textile quotas, embargos etc. The effects primarily impact customers and companies in individual markets. Global companies with operations in many countries are affected to a lesser extent and among global corporations trade interventions may be regarded as largely competition-neutral.
The most signifi cant currencies in which the Group's purchasing takes place are the US dollar and the euro. Fluctuation in the US dollar/euro exchange rate is the single largest transaction exposure for the Group. To hedge fl ow of goods in foreign currencies and thereby reduce the effects of future exchange rate fl uctuation, 90 percent of the Group's fl ow of goods are hedged under forward contracts on an ongoing basis throughout the year.
Starting on 1 December 2009, 100 percent of the Group's fl ow of goods (compared to 90 percent in the past) are being hedged and at the same time hedging of the mark-up of internal goods fl ows to the subsidiaries is being discontinued. For more information see the text under the heading "Changed currency hedging policy."
In addition to the effects of transaction exposure, translation effects also impact the Group's results due to changes in exchange rates between the local currencies of the various foreign subsidiaries against the Swedish krona compared to the same period the previous year. The underlying profi t/loss in a market may be unchanged in the local currency, but may increase or decrease when converted into the Swedish currency depending on whether the Swedish krona has weakened or strengthened.
Translation effects also arise in respect of the Group's net assets on consolidation of the foreign subsidiaries' balance sheets. No exchange rate hedging, so-called equity hedging, is carried out for this risk. See also Note 2, Financial risks.
For more information on currency hedging and fi nancial risks, see Note 2, Financial risks.
H&M's fi nancial goal is to enable the company to continue enjoying good growth and to be prepared to exploit future business opportunities. It is essential that the company's expansion is able to proceed as in the past with continued high degree of fi nancial strength and continued freedom of action.
Based on this policy, the Board of Directors has determined that the dividend should equal around half of the profi t after taxes. In addition, the Board may propose the distribution of surplus liquidity.
The Board of Directors has decided to propose to the 2010 Annual General Meeting a dividend of SEK 16.00 per share (15.50), which is equivalent to 81 percent (84) of the Group's profi t after tax.
| At the disposal of | ||
|---|---|---|
| the Annual General Meeting | SEK 15,298,171,245 | |
| The Board of Directors and the | ||
| Managing Director propose a dividend | ||
| of SEK 16.00 per share | SEK 13,240,576,000 | |
| To be carried forward as | ||
| retained earnings | SEK | 2,057,595,245 |
| SEK 15,298,171,245 |
The Board of Directors is of the opinion that the proposed distribution of earnings is justifi able taking into consideration the fi nancial position and future freedom of action of the Group and the parent company, and observing the requirements that the nature and extent of the business, its risks and future expansion plans impose on the Group's and the parent company's equity and liquidity.
| 1 DECEMBER – 30 NOVEMBER | 2009 | 2008 |
|---|---|---|
| Sales including VAT | 118,697 | 104,041 |
| Sales excluding VAT, Note 3, 4 | 101,393 | 88,532 |
| Cost of goods sold, Note 6, 8 | -38,919 | -34,064 |
| GROSS PROFIT | 62,474 | 54,468 |
| Selling expenses, Note 6, 8 | -38,224 | -32,185 |
| Administrative expenses, Note 6, 8, 9 | -2,606 | -2,145 |
| OPERATING PROFIT | 21,644 | 20,138 |
| Interest income | 467 | 1,060 |
| Interest expense | -8 | -8 |
| PROFIT AFTER FINANCIAL ITEMS | 22,103 | 21,190 |
| Tax, Note 10 | -5,719 | -5,896 |
| PROFIT FOR THE YEAR | 16,384 | 15,294 |
| All profi t is assignable to the parent company H & M Hennes & Mauritz AB's shareholders. | ||
| Earnings per share, SEK* | 19.80 | 18.48 |
| Number of shares | 827,536,000 | 827,536,000 |
* Before and after dilution.
| 30 NOVEMBER | 2009 | 2008 |
|---|---|---|
| ASSETS | ||
| FIXED ASSETS | ||
| Intangible fi xed assets | ||
| Brands, Note 11 | 396 | 443 |
| Customer relations, Note 11 | 110 | 123 |
| Leasehold rights, Note 11 | 744 | 659 |
| Goodwill, Note 11 | 424 | 431 |
| 1,674 | 1,656 | |
| Tangible fi xed assets | ||
| Buildings and land, Note 12 | 492 | 480 |
| Equipment, tools, fi xtures and fi ttings, Note 12 |
14,319 | 11,961 |
| 14,811 | 12,441 | |
| Long-term receivables | 551 | 476 |
| Deferred tax receivables, Note 10 | 1,246 | 1,299 |
| TOTAL FIXED ASSETS | 18,282 | 15,872 |
| CURRENT ASSETS | ||
| Stock-in-trade | 10,240 | 8,500 |
| Current receivables | ||
| Accounts receivable | 1,990 | 1,991 |
| Other receivables | 889 | 1,206 |
| Prepaid expenses, Note 13 | 937 | 948 |
| 3,816 | 4,145 | |
| Short-term investments, Note 14 | 3,001 | – |
| Liquid funds, Note 15 | 19,024 | 22,726 |
| TOTAL CURRENT ASSETS | 36,081 | 35,371 |
| TOTAL ASSETS | 54,363 | 51,243 |
| 30 NOVEMBER | 2009 | 2008 |
|---|---|---|
| EQUITY AND LIABILITIES | ||
| EQUITY | ||
| Share capital, Note 17 | 207 | 207 |
| Reserves | 1,514 | 1,410 |
| Retained earnings | 22,508 | 20,039 |
| Profi t for the year | 16,384 | 15,294 |
| TOTAL EQUITY | 40,613 | 36,950 |
| Long-term liabilities* | ||
| Provisions for pensions, Note 18 | 254 | 228 |
| Deferred tax liabilities, Note 10 | 2,038 | 1,818 |
| Other provisions, Note 19 | 368 | 368 |
| 2,660 | 2,414 | |
| Current liabilities** | ||
| Accounts payable | 3,667 | 3,658 |
| Tax liabilities | 439 | 1,279 |
| Other liabilities | 2,531 | 3,255 |
| Accrued expenses and prepaid income, Note 21 |
4,453 | 3,687 |
| 11,090 | 11,879 | |
| TOTAL LIABILITIES | 13,750 | 14,293 |
| TOTAL EQUITY AND LIABILITIES | 54,363 | 51,243 |
| Pledged assets and contingent liabilities |
– | – |
* Only provisions for pensions are interest-bearing. ** No current liabilities are interest-bearing.
All shareholders' equity is attributable to the shareholders of the parent company H & M Hennes & Mauritz AB since there are no minority interests. See also Note 19.
| SHARE CAPITAL | TRANSLATION EFFECTS |
HEDGING RESERVES |
RETAINED EARNINGS |
TOTAL SHAREHOLDERS' EQUITY |
|
|---|---|---|---|---|---|
| Shareholders' equity, 1 December 2008 | 207 | 1,942 | -532 | 35,333 | 36,950 |
| Translation effects, hedging reserves | – | -386 | 680 | – | 294 |
| Deferred tax | – | – | -190 | – | -190 |
| Income and expenses posted directly to equity | – | -386 | 490 | – | 104 |
| Profi t for the year | – | – | – | 16,384 | 16,384 |
| Total income and expenses | – | -386 | 490 | 16,384 | 16,488 |
| Dividend | – | – | – | -12,825 | -12,825 |
| Shareholders' equity, 30 November 2009 | 207 | 1,556 | -42 | 38,892 | 40,613 |
| SHARE CAPITAL | TRANSLATION EFFECTS |
HEDGING RESERVES |
RETAINED EARNINGS |
TOTAL SHAREHOLDERS' EQUITY |
|
|---|---|---|---|---|---|
| Shareholders' equity, 1 December 2007 | 207 | 263 | – | 31,623 | 32,093 |
| Translation effects, hedging reserves | – | 1,679 | -739 | – | 940 |
| Deferred tax | – | – | 207 | – | 207 |
| Income and expenses posted directly to equity | – | 1,679 | -532 | – | 1,147 |
| Profi t for the year | – | – | – | 15,294 | 15,294 |
| Total income and expenses | – | 1,679 | -532 | 15,294 | 16,441 |
| Dividend | – | – | – | -11,584 | -11,584 |
| Shareholders' equity, 30 November 2008 | 207 | 1,942 | -532 | 35,333 | 36,950 |
The Group's managed capital consists of shareholders' equity. The Group's goal with respect to managing capital is to enable good growth to continue and to be prepared to exploit business opportunities. It is essential that the expansion, as in the past, proceeds with continued high degree of fi nancial strength and continued freedom of action. Based on this policy, the Board of Directors has established a dividend policy whereby the dividend should equal around half of the profi t for the year after tax. In addition, the Board may propose that surplus liquidity may also be distributed. H&M meets the capital requirements set out in the Swedish Companies Act. No other external capital requirements exist.
| 1 DECEMBER – 30 NOVEMBER | 2009 | 2008 |
|---|---|---|
| Profi t after fi nancial items* | 22,103 | 21,190 |
| Provision for pensions | 26 | 72 |
| Depreciation | 2,830 | 2,202 |
| Tax paid | -6,468 | -5,940 |
| Cash fl ow from current operations before changes in working capital | 18,491 | 17,524 |
| Cash fl ow from changes in working capital | ||
| Current receivables | -71 | -1,343 |
| Stock-in-trade | -1,740 | -183 |
| Current liabilities | 1,293 | 1,968 |
| CASH FLOW FROM CURRENT OPERATIONS | 17,973 | 17,966 |
| Investment activities | ||
| Investments in leasehold rights | -180 | -446 |
| Investments in/sale of buildings and land | -25 | -23 |
| Investments in fi xed assets | -5,481 | -4,724 |
| Adjustment of consideration/acquisition of subsidiaries | 7 | -555 |
| Change in short-term investments, 4–12 months | -3,001 | 4,900 |
| Other investments | -75 | -242 |
| CASH FLOW FROM INVESTMENT ACTIVITIES | -8,755 | -1,090 |
| Financing activities | ||
| Dividend | -12,825 | -11,584 |
| CASH FLOW FROM FINANCING ACTIVITIES | -12,825 | -11,584 |
| CASH FLOW FOR THE YEAR | -3,607 | 5,292 |
| Liquid funds at beginning of fi nancial year | 22,726 | 16,064 |
| Cash fl ow for the year | -3,607 | 5,292 |
| Exchange rate effect | -95 | 1,370 |
| Liquid funds at end of fi nancial year** | 19,024 | 22,726 |
* Interest paid for the Group amounts to SEK 8 m (8). Received interest for the Group amounts to SEK 466 m (1,070).
** Liquid funds and short-term investments at the end of the fi nancial year amounted to SEK 22,025 m (22,726).
| 1 DECEMBER – 30 NOVEMBER | 2009 | 2008 |
|---|---|---|
| Sales including VAT | – | 136 |
| Sales excluding VAT | – | 136 |
| Internal sales excluding VAT, Note 5 | 5,521 | 5,175 |
| Cost of goods sold, Note 8 | – | -32 |
| GROSS PROFIT | 5,521 | 5,279 |
| Selling expenses, Note 6, 8 | -1,898 | -1,773 |
| Administrative expenses, Note 6, 8, 9 | -1,561 | -1,388 |
| OPERATING PROFIT | 2,062 | 2,118 |
| Dividend from subsidiaries | 13,092 | 12,839 |
| Interest income | 113 | 438 |
| Interest expense | 0 | 0 |
| PROFIT AFTER FINANCIAL ITEMS | 15,267 | 15,395 |
| Year-end appropriations, Note 23 | -41 | -663 |
| Tax, Note 10 | -608 | -534 |
| PROFIT FOR THE YEAR | 14,618 | 14,198 |
| 30 NOVEMBER | 2009 | 2008 |
|---|---|---|
| ASSETS | ||
| FIXED ASSETS | ||
| Tangible fi xed assets | ||
| Buildings and land, Note 12 | 51 | 58 |
| Equipment, tools, fi xtures and fi ttings, Note 12 |
363 | 356 |
| 414 | 414 | |
| Financial fi xed assets | ||
| Shares and participation rights, Note 24 | 572 | 583 |
| Receivables from subsidiaries | 705 | 345 |
| Long-term receivables | 30 | 13 |
| Deferred tax receivables, Note 10 | 56 | 51 |
| 1,363 | 992 | |
| TOTAL FIXED ASSETS | 1,777 | 1,406 |
| CURRENT ASSETS | ||
| Current receivables | ||
| Receivables from subsidiaries | 8,072 | 8,579 |
| Tax receivables | 627 | 143 |
| Other receivables | 13 | 46 |
| Prepaid expenses, Note 13 | 14 | 12 |
| 8,726 | 8,780 | |
| Short-term investments, Note 14 | 3,001 | – |
| Liquid funds, Note 15 | 3,644 | 6,525 |
| TOTAL CURRENT ASSETS | 15,371 | 15,305 |
| TOTAL ASSETS | 17,148 | 16,711 |
| 30 NOVEMBER | 2009 | 2008 |
|---|---|---|
| EQUITY AND LIABILITIES | ||
| EQUITY | ||
| Restricted equity | ||
| Share capital, Note 17 | 207 | 207 |
| Restricted reserves | 88 | 88 |
| 295 | 295 | |
| Non-restricted equity | ||
| Retained earnings | 681 | 783 |
| Profi t for the year | 14,618 | 14,198 |
| 15,299 | 14,981 | |
| TOTAL EQUITY | 15,594 | 15,276 |
| UNTAXED RESERVES, NOTE 25 | 825 | 782 |
| Long-term liabilities | ||
| Provisions for pensions, Note 18 | 211 | 193 |
| Current liabilities* | ||
| Accounts payable | 133 | 98 |
| Other liabilities | 245 | 219 |
| Accrued expenses and prepaid income, Note 21 |
140 | 143 |
| 518 | 460 | |
| TOTAL LIABILITIES | 729 | 653 |
| TOTAL EQUITY AND LIABILITIES | 17,148 | 16,711 |
| Pledged assets | – | – |
| Contingent liabilities, Note 26 | 11,292 | 11,751 |
* No current liabilities are interest-bearing.
| SHARE CAPITAL | RESTRICTED RESERVES |
RETAINED EARNINGS |
TOTAL SHAREHOLDERS' EQUITY |
|
|---|---|---|---|---|
| Shareholders' equity, 1 December 2008 | 207 | 88 | 14,981 | 15,276 |
| Group contributions provided | – | – | -2,044 | -2,044 |
| Tax effect of group contributions provided | – | – | 572 | 572 |
| Result of merger | – | – | -3 | -3 |
| Dividend | – | – | -12,825 | -12,825 |
| Profi t for the year | – | – | 14,618 | 14,618 |
| Shareholders' equity, 30 November 2009 | 207 | 88 | 15,299 | 15,594 |
| SHARE CAPITAL | RESTRICTED RESERVES |
RETAINED EARNINGS |
TOTAL SHAREHOLDERS' EQUITY |
|
|---|---|---|---|---|
| Shareholders' equity, 1 December 2007 | 207 | 88 | 12,367 | 12,662 |
| Dividend | – | – | -11,584 | -11,584 |
| Profi t for the year | – | – | 14,198 | 14,198 |
| Shareholders' equity 30 November 2008 | 207 | 88 | 14,981 | 15,276 |
| 1 DECEMBER – 30 NOVEMBER | 2009 | 2008 |
|---|---|---|
| Profi t after fi nancial items* | 15,267 | 15,395 |
| Provision for pensions | 18 | 80 |
| Depreciation | 94 | 88 |
| Tax paid | -525 | -701 |
| Cash fl ow from current operations before changes in working capital | 14,854 | 14,862 |
| Cash fl ow from changes in working capital | ||
| Current receivables | -1,503 | -2,261 |
| Stock-in-trade | – | 407 |
| Current liabilities | 58 | -117 |
| CASH FLOW FROM CURRENT OPERATIONS | 13,409 | 12,891 |
| Investment activities | ||
| Investments in/sale of buildings and land | 4 | -2 |
| Investments in equipment | -98 | -183 |
| Adjustment of consideration /Acquisition of subsidiaries | 7 | -566 |
| Change in short-term investments, 4 –12 months | -3,001 | 4,900 |
| Other investments | -377 | -348 |
| CASH FLOW FROM INVESTMENT ACTIVITIES | -3,465 | 3,801 |
| Financing activities | ||
| Dividend | -12,825 | -11,584 |
| CASH FLOW FROM FINANCING ACTIVITIES | -12,825 | -11,584 |
| CASH FLOW FOR THE YEAR | -2,881 | 5,108 |
| Liquid funds at beginning of fi nancial year | 6,525 | 1,417 |
| Cash fl ow for the year | -2,881 | 5,108 |
| Liquid funds at end of fi nancial year | 3,644 | 6,525 |
* Interest paid for the parent company amounts to SEK 0 m (0). Received interest for the parent company amounts to SEK 113 m (436).
The parent company H & M Hennes & Mauritz AB (publ) is a limited company domiciled in Stockholm, Sweden. The parent company's corporate identity number is 556042-7220. The company's share is listed on the Stockholm stock exchange, NASDAQ OMX Stockholm AB. The Group's business consists mainly of the sale of clothing and cosmetics to consumers. The company's fi nancial year is 1 December – 30 November. The Annual Report was approved for publication by the Board of Directors on 27 January 2010 and will be submitted to the Annual General Meeting for approval on 29 April 2010.
The holding of Ramsbury Invest AB (formerly Stefan Persson Placering AB) of shares in H & M Hennes & Mauritz AB represents 12.1 percent of all shares and around 57.3 percent of the total voting power. Ramsbury Invest AB (556423-5769) is thus formally the parent company of H & M Hennes & Mauritz AB.
The consolidated accounts have been prepared in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standard Board (IASB) and the interpretations provided by the International Financial Reporting Interpretations Committee (IFRIC). Since the Parent Company is a company within the EU, only IFRS approved by the EU are applied. The consolidated accounts also contain disclosures in accordance with the Swedish Financial Reporting Board's recommendation RFR 1.2, Supplementary Accounting Rules for Groups.
The fi nancial statements are based on historical acquisition costs, apart from certain fi nancial instruments which are reported at fair value.
The parent company's functional currency is Swedish kronor which is also the reporting currency for the parent company and for the Group. Unless otherwise indicated, all amounts are reported in millions of Swedish kronor (SEK m).
In the preparation of its fi nancial statements, the parent company has applied the Swedish Financial Reporting Board's recommendation RFR 2.2, Accounting for Legal Entities. The Swedish Accounts Act has also been applied. The main deviation from the Group's accounting principles is that the parent company does not apply IAS 39.
The accounting principles and disclosure requirements applied for 2008/2009 are the same as those applied in the previous year with the exception of the following:
– IFRIC 13 Customer Loyalty Programmes (effective from 2008/2009) – requires that rewards from customer loyalty programmes be accounted for as a separate component in the sale transaction in which they are awarded, and that the amount of proceeds allocated to the award credits, measured at fair value be reported as deferred income and distributed
over the periods when the obligation is fulfi lled. The application of this requirement has not involved any change in the reported profi t or fi nancial position.
A number of new standards, changes and interpretations of existing standards have been published but have not yet entered into force. The standards, amendments and interpretations below, which are deemed applicable to the Group, are not expected to have any effect on the consolidated accounts on their introduction beyond the provision of supplementary information in certain cases:
– IFRS 3 Business Combinations (revisions) and related revisions to IAS 27 Consolidated and Separate Financial Statements (effective from 2009/2010) – affect the accounting of possible future acquisitions and disposals and transactions with minority shareholders.
– IFRS 7, Financial Instruments: Disclosures, revision (effective from 2009/2010) – involves greater disclosure with respect to fi nancial instruments.
– IFRS 8 Operating Segments (effective from 2009/2010) – contains disclosure requirements with respect to the Group's operating segments and requires that fi nancial statements be based on the internal segments determined by the executive management and the accounting principles applied. H&M does not believe that the new standard will require any change to segment reporting.
– Revised IAS 1 Presentation of Financial Statements (effective from 2009/2010) – the revision requires, among other things, that items previously reported in the shareholders' equity calculation but that are not shareholder transactions be presented in an expanded income statement or in a separate report attached to the income statement. The Group will present a separate report.
The preparation of the Annual Report and consolidated accounts requires estimates and assumptions to be made as well as judgements in the application of the accounting principles. These affect recorded amounts for assets, liabilities, income, expenses and supplementary information. The estimates and assumptions are reviewed regularly and are based on historical experience, other relevant factors and expectations for the future. The actual outcome may therefore deviate from the estimates and assumptions made. It is the company's assessment that the estimates and assumptions made in the fi nancial statements up to 30 November 2009 will not signifi cantly affect the results and position for the forthcoming fi nancial year.
The consolidated accounts cover the parent company and its subsidiaries. Subsidiaries are included in the consolidated accounts from the date of acquisition, which is the date on
which the parent company gains a determining infl uence, and are included in the consolidated accounts until such date as the determining infl uence ends. The acquisition method is used in the preparation of the consolidated accounts. The net assets of acquired subsidiaries are determined based on a valuation of the fair value of the assets, liabilities and contingent liabilities at the time of acquisition. If the acquisition cost of the subsidiary's shares exceeds the calculated value at the time of acquisition of the Group's share of the net identifi able assets of the acquired company, the difference is reported as goodwill upon consolidation. If the acquisition cost is less than the fi nally established value of the net identifi able assets, the difference is reported directly in the income statement. The fi nancial reports for the parent company and the subsidiaries included in the consolidated accounts cover the same period and have been prepared in accordance with the accounting principles that apply to the Group. Intragroup transactions such as income, expenses, receivables and liabilities, as well as unrealised gains and losses are eliminated entirely in the preparation of the consolidated accounts.
In 2008 H&M acquired 60 percent of the shares in FaBric Scandinavien AB. The parties have reached an agreement whereby H&M has the opportunity/obligation to acquire the remaining shares within three to seven years. The calculated value of the put options allocated to minority shareholders in connection with the acquisition is reported as a provision for an additional contingent consideration. Therefore no minority interest is reported. Any change in fair value of the put options/consideration will be reported as an adjustment of goodwill.
Assets and liabilities in foreign subsidiaries are translated at the exchange rate on the closing date, while the income statement is translated at the average exchange rate for the fi nancial year. The translation difference arising from this, and also as a result of the fact that the net investment is translated at a different exchange rate at the end of the year than at the beginning of the year, is posted directly to equity as a translation reserve. On disposal of a foreign business the accumulated exchange rate differences in the income statement are posted together with the profi t or loss on disposal. Where foreign businesses are concerned, the accumulated translation differences attributable to the period before 1 December 2004 – the date of adoption of IFRS – have been set at zero in accordance with the transitional rules in IFRS 1.
Receivables and liabilities in foreign currencies are converted at the exchange rate on the closing date. Exchange rate differences arising on translation are reported in the income statement with the exception of exchange rate differences in respect of loans, which are to be regarded as net investment in a foreign business. Such exchange rate differences are posted directly to equity as translation effects.
The Group's income is generated mainly by sales of clothing and cosmetics to consumers. Sales revenue is reported less valueadded tax, returns and discounts as sales excluding VAT in the income statement. Income is reported in connection with sale/ delivery to the customer. Franchise sales have two components: sales of goods to franchisees, which are reported on delivery of the goods, and franchise fees, which are reported when the franchisee sells goods to the consumer. The Group's income exhibits seasonal variations. The fi rst quarter of the fi nancial year is normally the weakest and the last quarter the strongest. Interest income is reported as it is earned.
Advertising costs and other marketing activities are expensed on a continuous basis.
Intangible fi xed assets with a fi nite useful life are reported at cost less accumulated amortisation and any accumulated write-downs. Amortisation is distributed linearly over the assets' expected useful life. See also Note 8 and Note 11.
Goodwill is the amount by which the acquisition cost exceeds the fair value of the Group's share in the acquired subsidiary's identifi able net assets upon acquisition. Goodwill on acquisition of subsidiaries is reported as intangible assets. Intangible assets with an indefi nite useful life including goodwill are tested annually for impairment. If the book value of the asset exceeds the recoverable amount (the highest of the net realisable value and the value in use) the necessary amount is written down. Any writedown is recognised in profi t/loss.
Costs relating to intangible fi xed assets are reported in the balance sheet if it is likely that the company will gain from the future fi nancial benefi ts associated with the asset and if the asset's acquisition cost can be reliably calculated. Costs relating to ongoing maintenance and repair are reported as an expense in the period in which they arise. Tangible fi xed assets are reported at cost less accumulated depreciation and any accumulated writedowns. Depreciation is distributed linearly over the asset's expected useful life. No depreciation is applied to land. See also Note 8 and Note 12. The book value of tangible fi xed assets is tested for impairment. If the asset's book value exceeds the recoverable amount (the highest of the net realisable value and the value in use) the required amount is written down. Any write-down is recognised in profi t/loss.
Leasing agreements in which a substantial portion of the risks and benefi ts of ownership are retained by the lessor are classifi ed as operational leases. Financial leases exist when the fi nancial risks and benefi ts associated with the ownership of an object are essentially transferred from the lessor to the lessee, regardless
of whether the legal ownership belongs to the lessor or the lessee. Assets held under fi nancial leasing agreements are reported as fi xed assets and future payment commitments are reported as liabilities in the balance sheet. As of the closing day the Group had no leasing agreement reported according to the rules for fi nancial leases. Minimal leasing agreements relating to operational leases are recognised in the income statement as an expense and distributed linearly over the term of the agreement. The Group's main leasing agreements are rental agreements for premises. Variable (sales-based) rents are recognised in the same period as the corresponding sales.
Financial instruments are assessed and recognised in accordance with the rules in IAS 39. Financial instruments recognised in the balance sheet include on the assets side, liquid funds, accounts receivable, short-term investments, long-term receivables and derivatives. On the liabilities and equity side are accounts payables and derivatives. Financial instruments are recognised in the balance sheet when the Group becomes a party to the contractual terms of the instrument. Financial assets are removed from the balance sheet when the contractual rights to the cash fl ows from the asset cease. Financial liabilities are removed from the balance sheet when the obligation is met, cancelled or ends.
The Group classifi es its fi nancial instruments in the following categories:
Financial assets and liabilities at fair value through profi t or loss This category consists of two sub-groups: fi nancial assets and liabilities held for trading, and other fi nancial assets and liabilities that the company initially chose to place in this category when they were fi rst recognised. Assets and liabilities in this category are assessed continually at fair value, with changes in value recognised in profi t/loss.
This category primarily covers cash and bank balances as well as accounts receivable. Cash and bank balances are valued at the accrued acquisition cost. Accounts receivable have a short expected term and are recognised at the original invoiced amount without discount, with deductions for doubtful receivables.
Financial assets held to maturity are assets with payment fl ows that are fi xed or that can be established in advance and with a fi xed term which the Group has the express intention and capacity to hold until maturity. Assets in this category are valued at accrued acquisition cost, with the effective interest rate being used to calculate the value. As of the closing date, all of the Group's shortterm investments fell into this category.
This category contains fi nancial assets that were either placed in this category at the time of acquisition or have not been classifi ed
in any other category. These are valued continually at fair value, with changes in value recognised in equity. No fi nancial assets have been classifi ed in this category.
Financial liabilities that are not held for trading are assessed at their accrued acquisition value. Accounts payable fall into this category. These have a short expected term and are recognised at the nominal amount with no discounting.
All derivatives are reported initially and continually at fair value in the balance sheet. The result of revaluation of derivatives used for hedging is reported as described in the section Derivatives and Hedge Accounting.
Liquid funds consist of cash and bank balances as well as shortterm investments with a maximum term of three months from the date of acquisition. These investments carry no signifi cant risk of changes in value.
The Group's policy is for derivatives to be held for hedging purposes only. Derivative instruments comprise forward currency contracts used to hedge the risk of exchange rate fl uctuation for internal and external fl ow of goods.
H&M applies hedge accounting in accordance with IAS 39. To meet the requirements of hedge accounting there must be a clear link to the hedged item. In addition, the hedge must effectively protect the hedged item, hedge documentation must have been prepared and the effectiveness must be measurable.
In hedge accounting, derivatives are classifi ed as cash fl ow hedging or as fair value hedging. As of 30 November 2008 and 2009 all of the Group's derivatives were in the cash fl ow hedging category. How these hedging transactions are reported is described below.
Derivatives that hedge the forecast fl ow are reported in the balance sheet at fair value. Changes in value are reported directly in equity in the hedge reserve until such time as the hedged fl ow is recognised in the income statement, at which time the hedging instrument's accumulated changes in value are transferred to the income statement where they then correspond to the profi t/ loss effects of the hedged transaction.
When a hedging instrument is used to hedge fair value, the hedges are reported at fair value in the balance sheet and, correspondingly, the contracted fl ow is also reported at fair value with regard to the currency risk being hedged. Changes in the value of a derivative are reported in the income statement together with changes in the value of the hedged item. Cash fl ow hedging may also be used for contracted fl ow of goods.
Stock-in-trade is valued at the lower of the acquisition cost and the net realisable value. From the moment the goods are transferred from the supplier to the transport service provider appointed by H&M, the goods are owned according to civil law by H&M and become part of H&M's reported stock-in-trade. Goods that have not yet arrived at a store are valued at their actual acquisition cost including the cost of customs duties and freight.
For stock-in-trade in the stores the acquisition cost is determined by reducing the selling price by the calculated gross margin (retail method). The net realisable value is the estimated market value less the calculated selling expenses.
H&M has several different plans for benefi ts after employment has ended. The plans are either defi ned benefi t or defi ned contribution plans. Defi ned contribution plans are reported as an expense in the period in which the employee performs the service to which the benefi t relates. Defi ned benefi t plans are assessed separately for the respective plan based on the benefi ts earned during the previous and current periods. The defi ned benefi t obligations less the fair value of managed assets are reported under the heading "Provisions for Pensions." Defi ned benefi t plans are primarily found in Sweden. Pension obligations are assessed annually with the help of independent actuaries according to the so-called Projected Unit Credit Method. The assessment is made using actuarial assumptions. These assumptions include such things as the discount rate, anticipated salary and pension increases as well as the expected return on managed assets. Changes in the actuarial assumptions and outcomes that deviate from the assumptions give rise to actuarial gains or losses. Such gains or losses are recognised in profi ts in the year they arise.
For salaried employees in Sweden, H&M applies the ITP plan through an insurance policy with Alecta. According to the statements issued by the Swedish Financial Reporting Board (UFR 3), this is a defi ned benefi t plan that covers a number of employers. The plan will be reported as a defi ned contribution plan until the company gains access to the information allowing this plan to be reported according to the rules for defi ned benefi t plans.
Alecta's surplus may be allocated to the insured employer and/ or the insured employees. As of 30 September 2009, Alecta's consolidation ratio was 136 percent (126). The consolidation ratio is calculated as fair value of managed assets as a percentage of the obligations, calculated in accordance with Alecta's actuarial assumptions. This calculation is not in line with IAS 19. See Note 18 for further information.
Provisions are reported in the balance sheet when there is an undertaking as a result of an event occurring and it is likely that an outfl ow of resources will be required for the undertaking and when the amount can be reliably estimated. Other provisions include additional contingent consideration relating to put options allocated to minority shareholders.
Income taxes in the income statement represent current and deferred corporation tax payable by Swedish and foreign subsidiaries. Current tax is tax that will be paid or received in respect of the current year as well as adjustments to current tax attributable to previous periods. The income tax rate in force in each country is applied. For more information see Note 10.
Deferred tax is calculated according to the balance sheet method based on temporary differences arising between reported and fi scal values of assets and liabilities. Deferred tax is calculated using the tax rates that are expected to apply in the period when the receivables are deducted or the liabilities are settled, based on the tax rates (and the tax legislation) in force on the closing date. Deferred tax receivables are recognised for all temporary differences unless they relate to goodwill or an asset or a liability in a transaction that is not a company acquisition and that, at the time of acquisition, affects neither the reported nor taxable profi t or loss for the period. Also, temporary differences relating to investments in subsidiaries and associated companies are taken into account only to the extent it is likely that the temporary difference will be reversed in the foreseeable future. Deferred tax receivables for temporary differences and loss carryforwards are recognised only to the extent it is likely that these will be able to be utilised. As of the closing date, the Group had no loss carry-forwards that were not matched by reported deferred tax receivables.
The recorded values of deferred tax receivables are tested as of each closing date and reduced where it is no longer deemed likely that they will be able to be utilised.
The cash fl ow statement is prepared according to the indirect method. The reported cash fl ow covers only transactions involving payments in or out.
The Group's business consists mainly of sales of clothing and cosmetics to consumers. Internal follow-up is carried out by country. In order to clearly present the information for different segments, the operations are divided into three geographical areas: the Nordic region, Euro Zone countries excluding Finland, and the Rest of the World. The risks and opportunities are similar in each segment. The parent company and subsidiaries with no external sales are reported in a separate Group-wide segment. There is no internal division into different business segments and thus reporting in secondary segments is not relevant. Transactions between segments take place on normal commercial terms.
The Group's fi nancing and management of fi nancial risk is done centrally within the Group's fi nance department and is done according to a fi nancial policy established by the Board of Directors. The fi nancial policy is the most important fi nancial control tool for the company's fi nancial activities and establishes the framework within which the company works. The Group's
accounting principles for fi nancial instruments, including derivatives, are described in Note 1.
In the course of doing business the Group is exposed to risk associated with fi nancial instruments, such as liquid funds, shortterm investments, accounts receivable and accounts payable. The Group also executes transactions involving currency derivatives for the purpose of managing currency risk that arises in the course of the Group's business.
The risks relating to these instruments are primarily the following:
– Interest risk associated with liquid funds and short-term investments.
– Currency risk associated with foreign currency fl ows.
– Credit risk associated with fi nancial assets and derivative positions.
Interest risk is the risk that the value of a fi nancial instrument will vary due to changes in market interest rates. Interest risk relates to the risk that the Group's exposure to changes in market interest rates may affect net profi t. The Group's exposure to risk from changes in interest rates relates to liquid funds and shortterm investments. The original term of the investments as of the closing date is a maximum of twelve months by the closing date. The fi nancial policy permits investments of up to two years. The Group's liquid funds and short-term investments as of the closing date amounted to SEK 22,025 m. An interest rate increase of 0.5 percentage units on this amount would increase interest income by SEK 110 m. A corresponding decrease in the interest rate would reduce the interest income by the same amount.
Currency risk is, among other things, the risk that the value of fi nancial instruments or future cash fl ows will vary due to changes in exchange rates.
Currency exposure associated with fi nancial instruments H&M's currency risk associated with fi nancial instruments is mainly related to fi nancial investments, accounts payable and derivatives. To reduce currency risk associated with fi nancial investments, any surplus liquidity is invested in local currencies in the respective country. Most of the surplus liquidity is in Sweden and is invested in SEK. The Group's accounts payable in foreign currencies are mainly handled in Sweden and are to a large extent hedged through forward contracts. Based on this, a change in the value of the Swedish krona of 2 percent in relation to other currencies would result in an insignifi cant momentary effect on profi t related to the fi nancial instrument holdings as of the closing date. A strengthening of the Swedish krona would have a positive effect on the hedge reserve in equity in the amount of around SEK 250 m before taking into account the tax effect.
The Group's exposure to outstanding derivative instruments is reported in Note 16.
The Group's operating profi t for the year was affected by exchange rate differences relating to fl ow of goods in the amount of SEK -170 m (31).
The payment fl ows in the form of payments in foreign currencies for accounts receivable and payable expose the Group to currency risk. To manage the currency risk relating to changes in exchange rates, the Group hedges its currency risk within the framework of the fi nancial policy. The currency risk exposure is dealt with at the central level. Most of the Group's sales are made in euro and the Group's most signifi cant purchase currencies are the US dollar and the euro. Fluctuation in the US dollar/euro exchange rates is the single largest transaction exposure within the Group. To hedge the fl ow of goods in foreign currencies and thereby reduce the effects of future exchange rate fl uctuation, the majority of the Group's fl ow of goods (90 percent) were hedged under forward contracts on an ongoing basis throughout the 2008/2009 fi nancial year. Since the sole purpose of this currency management is to reduce risk, only exposure to the fl ow of goods is hedged.
In 2009 a review was conducted of the Group's currency fl ows and as a result, two changes were made:
– Starting on 1 December 2009, 100 percent of the Group's product buying will be currency-hedged, compared to 90 percent previously, for the purpose of reducing the volatility caused by exchange rate fl uctuation.
– Starting on 1 December 2009 the company will discontinue the hedging of the internal mark-up for the internal fl ow of goods to the subsidiaries.
For more information see under the heading "Changed currency hedging policy" in the Administration Report.
Credit risk is the risk that a party in a transaction involving fi nancial instruments may not be able to fulfi l its commitment and thereby cause a loss to the other party. Credit exposure arises when liquid funds including short-term investments are invested, but also arises in the form of counterparty risk associated with trading in derivatives. To limit credit risk, forward contract transactions are only executed with counterparties with a good credit rating, and funds are only invested in banks with a minimum rating of A-1/A- (Standard & Poor) and P2/A3 (Moody's). Maximum credit exposure as of 30 November 2009 is equivalent to the book value of liquid assets of SEK 19,024 m, short-term investments SEK 3,001 m, accounts receivables SEK 1,990 m and other SEK 811 m, totalling SEK 24,826 m. The accounts
receivables are shared between a large number of customers with low amounts per customer. The average debt was around SEK 2,000 (2,000). The loss on accounts receivables was insignifi cant.
| 2009 2008 Nordic region External net sales 16,302 15,323 Operating profi t 692 1,154 Operating margin, % 4.2 7.5 Assets, excluding tax receivables 5,037 4,059 Liabilities, excluding tax liabilities 1,639 1,168 Investments 375 268 Depreciation 259 198 Euro Zone excluding Finland External net sales 57,229 49,961 Operating profi t 2,545 2,938 Operating margin, % 4.4 5.9 Assets, excluding tax receivables 16,601 14,190 Liabilities, excluding tax liabilities 3,307 2,911 Investments 2,789 2,439 Depreciation 1,374 1,051 Rest of the world External net sales 27,862 23,248 Operating profi t 1,298 1,196 Operating margin, % 4.7 5.1 Assets, excluding tax receivables 10,711 9,234 Liabilities, excluding tax liabilities 1,875 1,601 Investments 2,135 1,827 Depreciation 1,015 823 Group functions Net sales to other segments 57,510 51,558 Operating profi t 17,109 14,850 Operating margin, % 29.7 28.8 Assets, excluding tax receivables 20,768 22,461 Liabilities, excluding tax liabilities 4,452 5,516 Investments 387 659 Depreciation 182 130 Eliminations Net sales to other segments -57,510 -51,558 Total External net sales 101,393 88,532 Operating profi t 21,644 20,138 Operating margin, % 21.3 22.7 Assets, excluding tax receivables 53,117 49,944 Liabilities, excluding tax liabilities 11,273 11,196 Investments 5,686 5,193 |
3 SEGMENT REPORTING | ||
|---|---|---|---|
| Depreciation | 2,830 | 2,202 |
| 2009 | 2008 | |
|---|---|---|
| Sweden | 6,323 | 5,973 |
| Norway | 4,482 | 4,235 |
| Denmark | 3,411 | 3,102 |
| UK | 6,723 | 6,401 |
| Switzerland | 5,615 | 4,534 |
| Germany | 25,289 | 21,434 |
| Netherlands | 6,220 | 5,710 |
| Belgium | 2,894 | 2,581 |
| Austria | 4,598 | 4,195 |
| Luxembourg | 371 | 316 |
| Finland | 2,086 | 2,013 |
| France | 7,070 | 6,686 |
| USA | 7,173 | 6,264 |
| Spain | 5,448 | 5,006 |
| Poland | 2,033 | 2,081 |
| Czech Republic | 561 | 564 |
| Portugal | 773 | 634 |
| Italy | 3,013 | 2,229 |
| Canada | 1,972 | 1,629 |
| Slovenia | 517 | 500 |
| Ireland | 476 | 418 |
| Hungary | 251 | 254 |
| Slovakia | 157 | 115 |
| Greece | 403 | 253 |
| China | 1,513 | 827 |
| Japan | 1,111 | 188 |
| Russia | 319 | – |
| Franchise | 591 | 390 |
| Total | 101,393 | 88,532 |
The parent company's internal sales include royalties from Group companies of SEK 5,521 m (5,145).
| 2009 | Board, MD, | of which | |||
|---|---|---|---|---|---|
| executive | Salary | Payroll | of which | pens. | |
| management | other | overheads | pens. | Board, MD | |
| salary | employees | total | total | exec. mgmt | |
| Sweden, | |||||
| parent company | 54 | 408 | 240 | 81 | 28 |
| Subsidiaries | 61 | 13,015 | 2,862 | 140 | 6 |
| Group total | 115 | 13,423 | 3,102 | 221 | 34 |
| 2008 | Board, MD, executive management salary |
Salary other employees |
Payroll overheads total |
of which pens. total |
of which pens. Board, MD exec. mgmt |
|---|---|---|---|---|---|
| Sweden, | |||||
| parent company | 49 | 372 | 263 | 128 | 85 |
| Subsidiaries | 52 | 11,324 | 2,434 | 90 | 4 |
| Group total | 101 | 11,696 | 2,697 | 218 | 89 |
Board fees for the year as approved by the 2008 AGM amounted to SEK 4.25 m (4.25). Board fees were paid as follows:
| SEK | |
|---|---|
| Stefan Persson, Chairman | 1,350,000 |
| Fred Andersson | 375,000 |
| Mia Brunell Livfors | 375,000 |
| Lottie Knutson | 375,000 |
| Sussi Kvart | 450,000 |
| Bo Lundquist | 450,000 |
| Stig Nordfelt | 500,000 |
| Karl-Johan Persson* | – |
| Melker Schörling | 375,000 |
* Karl-Johan Persson received no Board fees as he is employed by the company.
As of the AGM on 4 May 2009 the Board consists of seven ordinary members elected by the AGM. There are also two employee representatives with two deputies for these positions. Seven members of the Board are women, four are men and four of the eleven are employed by the company.
Based on a resolution regarding guidelines passed by the 2009 AGM. See the Administration Report page 6.
Rolf Eriksen was the Managing Director until 30 June 2009. On 1 July 2009 Karl-Johan Persson took over as Managing Director.
Remuneration to the former Managing Director for the 2009 fi nancial year in the form of salary, fees and benefi ts amounted to SEK 15.8 m (16.8) which included a bonus of SEK 2.1 m (2.1). The pension expenses for the former Managing Director during the year amounted to SEK 16.0 m (60.2). The change in the year's pension commitments entered as liabilities for the former Managing Director include actuarial gains of SEK 3.8 m (actuarial losses of 38). The total pension commitments entered as liabilities, which are based on the fact that the former Managing Director will receive a pension for the fi rst three years of his retirement equivalent to 65 percent of his fi xed salary followed by a lifelong pension equivalent to 50 percent of the same salary, amount to SEK 152.2 m (136.7). The former Managing Director retired on 1 September 2009.
Remuneration to the current Managing Director for the period from 1 July 2009 to 30 November 2009 in the form of salary and benefi ts amounted to SEK 4.6 m. No bonus was paid out in 2009. Pension benefi ts for the current Managing Director is covered by a defi ned contribution plan and by the ITP plan. The total pension cost shall not exceed a total of 30 percent of
the Managing Director's fi xed salary. The pension expenses for the current Managing Director amounted to SEK 1.4 m.
The Managing Director is entitled to a 12-month period of notice. In the event the company cancels his employment contract, the Managing Director will also receive severance pay of an extra year's salary. The Managing Director's terms of employment are determined by the Board of Directors.
Remuneration to other members of the executive management team in the form of salary and benefi ts were paid in the amount of SEK 42.9 m (38.5) which included bonuses of SEK 2.7 m (2.6). Pension expenses relating to other members of executive management during the year amounted to SEK 11.8 m (24.9). The other members of executive management are 12 (12) individuals, fi ve of whom are women.
In addition to the Managing Director, the executive management team consists of the heads of the following functions: Finance, Buying, Production, Sales, Expansion, IR, Accounts, Marketing, HR, Communications, Corporate Social Responsibility and Security. There are rules in place for these individuals with respect to supplements to retirement pension beyond the ITP plan. The retirement age varies between 60 and 65. The cost of this commitment is partially covered by separate insurance policies.
In addition, bonuses amounting to SEK 5.6 m (8.0) were paid out to country managers. No severance pay agreements exist within the Group other than for the Managing Director as described above. The terms of employment for other members of executive management are determined by the Managing Director and the Chairman of the Board.
| 2009 | Male | 2008 | Male | |
|---|---|---|---|---|
| Total | % | Total | % | |
| Sweden | 4,874 | 21 | 4,924 | 21 |
| Norway | 1,546 | 10 | 1,575 | 7 |
| Denmark | 1,419 | 6 | 1,335 | 6 |
| UK | 4,562 | 23 | 4,275 | 24 |
| Switzerland | 1,813 | 13 | 1,599 | 12 |
| Germany | 11,114 | 19 | 10,746 | 19 |
| Netherlands | 2,196 | 17 | 2,395 | 19 |
| Belgium | 1,480 | 21 | 1,332 | 15 |
| Austria | 1,881 | 10 | 1,986 | 10 |
| Luxembourg | 134 | 12 | 134 | 11 |
| Finland | 782 | 8 | 840 | 10 |
| France | 3,498 | 27 | 3,396 | 25 |
| USA | 4,253 | 31 | 6,820 | 31 |
| Spain | 4,009 | 18 | 4,528 | 20 |
| Poland | 2,452 | 19 | 1,956 | 21 |
| Czech Republic | 263 | 11 | 281 | 6 |
| Portugal | 646 | 20 | 606 | 25 |
| Italy | 1,632 | 29 | 1,052 | 30 |
| Canada | 1,096 | 23 | 1,011 | 22 |
| Slovenia | 139 | 14 | 129 | 15 |
| Ireland | 236 | 20 | 220 | 15 |
| Hungary | 135 | 15 | 135 | 12 |
| Slovakia | 69 | 19 | 65 | 38 |
| 2009 Total |
Male % |
2008 Total |
Male % |
|
|---|---|---|---|---|
| Greece | 262 | 19 | 247 | 20 |
| China | 1,521 | 30 | 1,109 | 26 |
| Japan | 442 | 42 | 203 | 33 |
| Russia | 374 | 31 | 26 | 23 |
| South Korea | 44 | 32 | – | – |
| Other countries | 604 | 51 | 505 | 48 |
| Group total | 53,476 | 21 | 53,430 | 21 |
| Sickness absence as % of reg. working hours |
% of sickness absence lasting over 60 days |
|||
|---|---|---|---|---|
| 2009 | 2008 | 2009 | 2008 | |
| Female employees | 2.8 | 2.6 | 24.8 | 35.4 |
| Male employees | 2.1 | 1.7 | 17.5 | 5.9 |
| Employees in age group | ||||
| < 30 years | 2.6 | 1.9 | 15.9 | – |
| Employees in age group | ||||
| 30 – 49 years | 2.5 | 2.3 | 21.3 | 29.2 |
| Employees in age group | ||||
| > 50 years | 1.9 | 1.3 | 38.7 | – |
| Total | 2.5 | 2.2 | 21.9 | 24.7 |
Depreciation has been calculated at 12 percent of the acquisition cost of equipment and leasehold rights, and 20 percent for computer equipment and vehicles, based on their estimated useful life. Depreciation on brands and customer relations relating to FaBric Scandinavien AB is assessed at 10 percent of the acquisition cost. Buildings are depreciated at 3 percent of their acquisition cost. No depreciation is applied to land values. Depreciation for the year is reported in the income statement as follows:
| GROUP | PARENT COMPANY | |||
|---|---|---|---|---|
| 2009 | 2008 | 2009 | 2008 | |
| Cost of goods sold | 310 | 245 | – | 11 |
| Selling expenses | 2,350 | 1,825 | – | 73 |
| Administrative expenses | 170 | 132 | 94 | 4 |
| Total | 2,830 | 2,202 | 94 | 88 |
| GROUP | PARENT COMPANY | |||
|---|---|---|---|---|
| 2009 | 2008 | 2009 | 2008 | |
| Ernst & Young | ||||
| Audit assignments | 16.7 | 14.5 | 2.2 | 2.2 |
| Other assignments | 15.2 | 14.0 | 0.1 | 0.6 |
| Other auditors | ||||
| Audit assignments | 3.2 | 2.9 | – | – |
| Other assignments | 1.8 | 1.1 | – | – |
| Total | 36.9 | 32.5 | 2.3 | 2.8 |
| GROUP 2009 2008 2009 Tax expense (-) /tax receivable (+): Current tax Tax expense for the period -5,630 -5,034 -40 Tax effect of group contributions provided – – -572 Adjusted tax expense for previous years – -1 -1 Total -5,630 -5,035 -613 Deferred tax receivable (+) / tax expense (-) in respect of |
||
|---|---|---|
| PARENT COMPANY | ||
| 2008 | ||
| -556 | ||
| – | ||
| 3 | ||
| -553 | ||
| temporary differences in | ||
| stock-in-trade 130 32 – |
– | |
| loss carry-forward – 1 – |
– | |
| pension provisions 7 20 5 |
19 | |
| tax allocation reserve -79 -1,017 – |
– | |
| intangible fi xed assets 18 10 – |
– | |
| other temporary differences -165 93 – |
– | |
| Total -89 -861 5 |
19 | |
| Total -5,719 -5,896 -608 |
-534 | |
| Reconciliation between current | ||
| tax rate and effective tax rate: | ||
| Expected tax expense | ||
| according to the Swedish tax | ||
| rate of 28% -6,189 -5,933 -4,263 |
-4,126 | |
| Effect of changed tax rate in | ||
| Sweden 225 – – |
– | |
| Difference in foreign tax rates 261 279 – |
– | |
| Non-deductible/non-taxable -128 -153 -15 |
-8 | |
| Other 112 -88 – |
– | |
| Tax for previous years – -1 -2 |
3 | |
| Tax-free dividend subsidiaries – – 3,666 |
3,597 | |
| Total -5,719 -5,896 -614 |
-534 | |
| Reported deferred tax | ||
| receivable relates to: | ||
| Pensions 84 56 56 |
||
| Loss carry-forward in | 51 | |
| subsidiaries 0 3 – |
||
| Temporary differences in | ||
| stock-in-trade 978 819 – Hedge reserve 21 207 – |
||
| Other temporary differences 163 214 – |
– – |
|
| Total 1,246 1,299 56 |
– – |
| GROUP | |||
|---|---|---|---|
| 2009 | 2008 | ||
| Reported deferred tax | |||
| expense relates to | |||
| Intangible fi xed assets | 142 | 159 | |
| Tangible fi xed assets | 456 | 432 | |
| Stock-in-trade | 291 | 210 | |
| Tax allocation reserve | 1,073 | 1,017 | |
| Other temporary differences | 76 | – | |
| Total | 2,038 | 1,818 |
is based on H&M's assessment of the opportunities and risks associated with the business. The discount rate is based on an average weighted capital cost that is estimated to be on a par with the external requirements that the market imposes for similar companies. No impairment was identifi ed and H&M is of the opinion that reasonable possible changes in the variables above would not have such a signifi cant impact that the recovery value would be reduced to a lower amount than the booked value. An adjustment of the consideration for FaBric Scandinavien AB of SEK 7 m was made and this reduced the reported goodwill value.
| GROUP | ||
|---|---|---|
| 2009 | 2008 | |
| Brand* | ||
| Opening acquisition cost | 470 | – |
| Acquisitions during the year | – | 470 |
| Closing acquisition cost | 470 | 470 |
| Opening amortisation | -27 | – |
| Amortisation for the year | -47 | -27 |
| Closing accumulated amortisation | -74 | -27 |
| Closing book value | 396 | 443 |
| Customer relations* | ||
| Opening acquisition cost | 131 | – |
| Acquisitions during the year | – | 131 |
| Closing acquisition cost | 131 | 131 |
| Opening amortisation | -8 | – |
| Amortisation for the year | -13 | -8 |
| Closing accumulated amortisation | -21 | -8 |
| Closing book value | 110 | 123 |
| Leasehold rights | ||
| Opening acquisition cost | 890 | 476 |
| Acquisitions during the year | 180 | 446 |
| Sales/disposals | 7 | -77 |
| Translation effects | 9 | 45 |
| Closing acquisition cost | 1,086 | 890 |
| Opening amortisation | -231 | -210 |
| Sales/disposals | 12 | 77 |
| Amortisation for the year | -122 | -74 |
| Translation effects | -1 | -24 |
| Closing accumulated amortisation | -342 | -231 |
| Closing book value | 744 | 659 |
| Goodwill* | ||
| Opening acquisition cost | 431 | – |
| Acquisitions during the year Adjusted consideration FaBric Scandinavien AB |
– -7 |
431 – |
| Closing acquisition | 424 | 431 |
* Brand, customer relations and goodwill assets have been added through the acquisition in 2008 of the company FaBric Scandinavien AB, which was a cash-generating unit. A goodwill impairment test was carried out at the end of 2009. The impairment test is based on a calculation of value in use. The value in use has been assessed based on discounted cash fl ows according to the forecasts for the next ten years and with an annual growth rate of 2 percent in subsequent years. A discount rate of 12 percent before tax was used. The cash fl ows are based on H&M's business plan. The growth rate of 2 percent
| GROUP | PARENT COMPANY | |||
|---|---|---|---|---|
| 2009 | 2008 | 2009 | 2008 | |
| Buildings | ||||
| Opening acquisition cost | 596 | 564 | 109 | 107 |
| Acquisitions during the year | 29 | 23 | – | 2 |
| Sales/disposals | -4 | -35 | -4 | – |
| Translation effects | 8 | 44 | – | – |
| Closing acquisition cost | 629 | 596 | 105 | 109 |
| Opening depreciation | -184 | -158 | -54 | -51 |
| Sales/disposals | – | 4 | – | – |
| Depreciation for the year | -18 | -16 | -3 | -3 |
| Translation effects | -5 | -14 | – | – |
| Closing accumulated | ||||
| depreciation | -207 | -184 | -57 | -54 |
| Closing book value | 422 | 412 | 48 | 55 |
| Land | ||||
| Opening acquisition cost | 68 | 60 | 3 | 3 |
| Acquisitions during the year | – | 0 | – | – |
| Sales/disposals | – | – | – | – |
| Translation effects | 2 | 8 | – | – |
| Closing book value | 70 | 68 | 3 | 3 |
The tax assessment values for the Swedish properties amount to SEK 73 m (71). The book value of these amounts to SEK 51 m (58).
| 2009 | 2008 | 2009 | 2008 | |
|---|---|---|---|---|
| Equipment | ||||
| Opening acquisition cost | 21,020 | 16,173 | 769 | 736 |
| Acquisitions during the year | 5,481 | 4,724 | 98 | 183 |
| Sales/disposals | -2,266 | -1,346 | -131 | -150 |
| Translation effects | -659 | 1,469 | – | – |
| Closing acquisition cost | 23,576 | 21,020 | 736 | 769 |
| Opening depreciation | -9,059 | -7,352 | -413 | -478 |
| Sales/disposals | 2,115 | 1,203 | 131 | 150 |
| Depreciation for the year | -2,630 | -2,077 | -91 | -85 |
| Translation effects | 317 | -833 | – | – |
| Closing accumulated | ||||
| depreciation | -9,257 | -9,059 | -373 | -413 |
| Closing book value | 14,319 | 11,961 | 363 | 356 |
The Group has no signifi cant leasing agreements other than the rental agreements for rented premises entered into at normal market rates. Rental costs for the 2009 fi nancial year amounted to SEK 12,249 m (9,776), of which sales-based rent amounted to SEK 888 m (740).
Rent according to the Group's rental agreements (basic rent including any sales-based rent) amounts to SEK m: Rental commitment 2010 9,383 Rental commitment 2011– 2014 26,416 Rental commitment 2015 and thereafter 18,546
| GROUP | PARENT COMPANY | |||
|---|---|---|---|---|
| 2009 | 2008 | 2009 | 2008 | |
| Prepaid rent | 697 | 642 | 5 | 4 |
| Other items | 240 | 306 | 9 | 8 |
| Total | 937 | 948 | 14 | 12 |
| GROUP | PARENT COMPANY | |||
|---|---|---|---|---|
| 2009 | 2008 | 2009 | 2008 | |
| Short-term investments | ||||
| 4 – 12 months | 3,001 | – | 3,001 | – |
| Total | 3,001 | – | 3,001 | – |
The balance sheet item includes interest-bearing investments, i.e. investments in securities issued by banks or in short-term bank deposits.
| GROUP | PARENT COMPANY | |||
|---|---|---|---|---|
| 2009 | 2008 | 2009 | 2008 | |
| Cash and bank balances | 6,629 | 3,028 | 143 | 8 |
| Short-term investments | ||||
| 0 – 3 months | 12,395 | 19,698 | 3,501 | 6,517 |
| Total | 19,024 | 22,726 | 3,644 | 6,525 |
Investment are made on market terms and interest rates are between 0.16 and 5.5 percent. The difference in interest rates depends on the currency in which the funds are invested.
The table below shows the outstanding forward contracts as of the closing date:
| Currency pair |
Book value and fair value |
Nominal amount |
Average remaining term in months |
|||
|---|---|---|---|---|---|---|
| SELL/BUY | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 |
| NOK/SEK | -24 | -1 | 762 | 830 | 4 | 4 |
| GBP/SEK | 31 | -27 | 1,308 | 1,210 | 4 | 4 |
| DKK/SEK | -7 | -46 | 667 | 637 | 4 | 4 |
| CHF/SEK | -16 | -90 | 1,432 | 1,209 | 4 | 4 |
| EUR/SEK | -82 | -820 | 11,862 | 11,950 | 4 | 4 |
| PLN/SEK | -18 | 9 | 472 | 633 | 4 | 4 |
| USD/SEK | 38 | -216 | 1,053 | 1,380 | 4 | 4 |
| CAD/SEK | 2 | – | 449 | – | 4 | – |
| JPY/SEK | -20 | – | 509 | – | 4 | – |
| SEK/USD | 2 | 550 | 5,082 | 5,338 | 3 | 3 |
| SEK/EUR | 19 | 66 | 1,040 | 1,423 | 2 | 2 |
| Total | -75 | -575 | 24,636 | 24,610 |
Forward contracts with a positive market value amount to SEK 260 m (660), which is reported under Other current receivables. Forward contracts with a negative market value amount to SEK 335 m (1,234), which is reported under Other current liabilities.
Of the outstanding forward contracts, losses of SEK 16 m were recorded in the income statement with changes in value of the underlying hedged item. Residual fair value of SEK 60 m was recorded in the hedge reserve in equity.
The fair value was established based on listed prices.
The share capital is divided between 97,200,000 class A shares (ten votes per share) and 730,336,000 class B shares (one vote per share). There are no other differences between the rights associated with the shares. The total number of shares is 827,536,000.
| GROUP | PARENT COMPANY | |||
|---|---|---|---|---|
| 2009 | 2008 | 2009 | 2008 | |
| Capitalised value of defi ned | ||||
| benefi t obligations | 335 | 299 | 238 | 219 |
| Fair value of managed assets | -81 | -71 | -27 | -26 |
| Provisions for pension | ||||
| obligations recorded in the | ||||
| balance sheet | 254 | 228 | 211 | 193 |
| Opening balance, 1 December | 228 | 156 | 193 | 113 |
| Reported pension expenses, | ||||
| net | 38 | 82 | 23 | 84 |
| Premiums paid | -5 | -4 | -2 | -2 |
| Pensions paid out | -7 | -6 | -3 | -2 |
| Recorded amount of | ||||
| defi ned benefi t obligations, | ||||
| 30 November | 254 | 228 | 211 | 193 |
| GROUP | PARENT COMPANY | |||
|---|---|---|---|---|
| 2009 | 2008 | 2009 | 2008 | |
| Expenses for service during | ||||
| the current year | 34 | 23 | 23 | 18 |
| Interest expense | 11 | 10 | 7 | 7 |
| Expected return on managed | ||||
| assets | -3 | -3 | -1 | -1 |
| Actuarial gains (-) | ||||
| and losses (+) | -4 | 51 | -6 | 59 |
| Changes in foreign exchange | ||||
| rates for plans valued in a | ||||
| currency other than the | ||||
| reporting currency | 0 | 1 | – | 1 |
| Reported pension expenses, | ||||
| net | 38 | 82 | 23 | 84 |
The cost of defi ned contribution pension plans amounts to SEK 193 m (135).
Signifi cant actuarial assumptions on the balance sheet date (weighted average amounts)
| Discount rate | 3.61 % | 3.30 % | 3.50 % | 3.00 % |
|---|---|---|---|---|
| Expected return on managed | ||||
| assets | 3.57 % | 3.76 % | 3.25 % | 3.25 % |
| Future salary increases | 4.63 % | 4.67 % | 5.00 % | 5.00 % |
| Future pension increases | ||||
| (infl ation) | 3.00 % | 2.06 % | 2.00 % | 2.00 % |
| GROUP | ||
|---|---|---|
| 2009 | 2008 | |
| Provision for additional consideration for | ||
| FaBric Scandinavien AB | 368 | 368 |
| Total | 368 | 368 |
H&M acquired 60 percent of the shares in the fashion company FaBric Scandinavien AB in 2008. At the time of the acquisition the parties signed an agreement giving H&M the opportunity/ obligation to acquire the remaining shares within three to seven years. The assessed value of the put options allocated to minority shareholders in connection with the acquisition is reported as a provision for an additional contingent consideration. Therefore no minority interest is reported. At the time of the acquisition the provision was SEK 368 m. Any change in fair value of the put options/additional consideration will be recorded as an adjustment of goodwill.
| 2009 | Loan receivables and accounts receivable |
Financial assets held to maturity |
Deriv. for hedging recog. at fair value in equity |
Other fi nancial liabilities |
Total booked value |
|---|---|---|---|---|---|
| Other long-term receivables | – | 551 | – | – | 551 |
| Accounts receivable | 1,990 | – | – | – | 1,990 |
| Other receivables | – | – | 260 | – | 260 |
| Short-term investments | – | 3,001 | – | – | 3,001 |
| Liquid funds | 12,395 | 6,629 | – | – | 19,024 |
| Total fi nancial assets | 14,385 | 10,181 | 260 | – | 24,826 |
| Accounts payable | – | – | – | 3,667 | 3,667 |
| Other liabilities | – | – | 335 | – | 335 |
| Total fi nancial liabilities | – | – | 335 | 3,667 | 4,002 |
| 2008 | Loan receivables and accounts receivable |
Financial assets held to maturity |
Deriv. for hedging recog. at fair value in equity |
Other fi nancial liabilities |
Total booked value |
|---|---|---|---|---|---|
| Other long-term receivables | – | 476 | – | – | 476 |
| Accounts receivable | 1,991 | – | – | – | 1,991 |
| Other receivables | – | – | 660 | – | 660 |
| Short-term investments | – | – | – | – | 0 |
| Liquid funds | 3,028 | 19,698 | – | – | 22,726 |
| Total fi nancial assets | 5,019 | 20,174 | 660 | – | 25,853 |
| Accounts payable | – | – | – | 3,658 | 3,658 |
| Other liabilities | – | – | 1,234 | – | 1,234 |
| Total fi nancial liabilities | – | – | 1,234 | 3,658 | 4,892 |
The fair value of all assets and liabilities corresponds to the book value since the assets and liabilities that are recognised at the accrued acquisition cost have short remaining terms.
| GROUP | PARENT COMPANY | |||
|---|---|---|---|---|
| 2009 | 2008 | 2009 | 2008 | |
| Holiday pay liability | 569 | 524 | 42 | 35 |
| Payroll overheads | 383 | 425 | 48 | 52 |
| Payroll liability | 489 | 512 | 10 | 3 |
| Costs relating to premises | 1,476 | 1,032 | 4 | 1 |
| Other accrued overheads | 1,536 | 1,194 | 36 | 52 |
| Total | 4,453 | 3,687 | 140 | 143 |
Ramsbury Invest AB is the parent company of H & M Hennes & Mauritz AB. The H&M Group leases the following store premises in properties directly or indirectly owned by Stefan Persson and family: Drottninggatan 50–52 in Stockholm, Drottninggatan 56 in Stockholm, Kungsgatan 55 in Gothenburg, Stadt Hamburgsgatan 9 in Malmö, Amagertorv 23 in Copenhagen and Oxford Circus in London, and since January 2008 premises for H&M's head offi ce in Stockholm. Rent is paid at market rates and totalled SEK 193 m (156) for the fi nancial year.
Karl-Johan Persson has received remuneration in the form of a salary and benefi ts amounting to SEK 5.1 m (0.7) for work carried out during the fi nancial year as Head of H&M's expansion until 30 June 2009 and from 1 July 2009 as Managing Director for H & M Hennes & Mauritz AB. More information regarding salaries and other remuneration to related parties is provided in Note 6.
| PARENT COMPANY | |||
|---|---|---|---|
| 2009 | 2008 | ||
| Provision for tax allocation reserve | -43 | -662 | |
| Depreciation in excess of plan | 2 | -1 | |
| Total | -41 | -663 |
All Group companies are wholly-owned except FaBric Scandinavien AB which is owned to 60 percent. The parties have also signed an agreement under which H&M has the opportunity/obligation to acquire the remaining shares within three to seven years.
| 2009 | Corporate | No. of | Book | |
|---|---|---|---|---|
| ID number | shares | value | Domicile | |
| Parent company shareholding | ||||
| Bekå AB | 556024-2488 | 450 | 1.3 | Stockholm |
| H & M Hennes & Mauritz | ||||
| Sverige AB | 556151-2376 | 1,250 | 0.1 | Stockholm |
| H & M Rowells AB | 556023-1663 | 1,150 | 0.6 | Stockholm |
| H & M Hennes & Mauritz | ||||
| GBC AB | 556070-1715 | 1,000 | 2.6 | Stockholm |
| H & M Hennes & Mauritz | ||||
| International B.V. | 40 | 0.1 Netherlands | ||
| H & M India Private Ltd | 1,633,500 | 2.9 | India | |
| H & M Hennes & Mauritz | ||||
| Japan KK | 99 | 11.7 | Japan | |
| FaBric Scandinavien AB | 556663-8522 | 828 552.9 | Tranås | |
| H & M Hennes & Mauritz | ||||
| International AB | 556782-4890 | 1,000 | 0.1 | Stockholm |
| Total | 572.3 |
Corporate
| 2009 | ID number | Domicile |
|---|---|---|
| Subsidiaries' holdings | ||
| H & M Hennes & Mauritz AS | Norway | |
| H & M Hennes & Mauritz A/S | Denmark | |
| H & M Hennes & Mauritz UK Ltd | UK | |
| H & M Hennes & Mauritz SA | Switzerland | |
| H & M Hennes & Mauritz B.V. & Co. KG | Germany | |
| Impuls GmbH | Germany | |
| H & M Hennes & Mauritz Logistics GBC GmbH | Germany | |
| H & M Hennes & Mauritz Logistics GmbH & Co. KG | Germany | |
| H & M Hennes & Mauritz Holding BV | Netherlands | |
| H & M Hennes & Mauritz Netherlands BV | Netherlands | |
| H & M Hennes & Mauritz USA BV | Netherlands | |
| H & M Hennes & Mauritz Belgium NV | Belgium | |
| H & M Hennes & Mauritz GesmbH | Austria | |
| H & M Hennes & Mauritz OY | Finland | |
| H & M Hennes & Mauritz SARL | France | |
| H & M Hennes & Mauritz LP | USA | |
| Hennes & Mauritz SL | Spain | |
| H & M Hennes & Mauritz sp. z o.o. | Poland | |
| H & M Hennes & Mauritz logistics sp. z o.o. | Poland | |
| H & M Hennes & Mauritz CZ, s.r.o. | Czech Republic | |
| Hennes & Mauritz Lda | Portugal | |
| H & M Hennes & Mauritz S.r.l. | Italy | |
| H & M Hennes & Mauritz Inc. | Canada | |
| H & M Hennes & Mauritz d.o.o. | Slovenia | |
| H & M Hennes & Mauritz (Ireland) Ltd | Ireland | |
| H & M Hennes & Mauritz Kft | Hungary | |
| H & M Hennes & Mauritz Far East Ltd | Hong Kong | |
| Puls Trading Far East Ltd | Hong Kong | |
| H & M Hennes & Mauritz Holding Asia Ltd | Hong Kong | |
| H & M Hennes & Mauritz Ltd | Hong Kong | |
| Hennes & Mauritz (Shanghai) Commercial Ltd Co | China | |
| H & M Hennes & Mauritz SK s.r.c. | Slovakia | |
| H & M Hennes & Mauritz A.E. | Greece | |
| Monki AB | 556686-8609 | Tranås |
| Weekday AB | 556427-8926 | Stockholm |
| Weekday Brands AB | 556675-8438 | Tranås |
| Weekday A/S | Denmark | |
| H & M Hennes & Mauritz LLP Russia | Russia | |
| H & M Hennes & Mauritz TR Tekstil ltd sirketi | Turkey | |
| H & M Hennes & Mauritz Ltd | South Korea | |
| FaBric Sales Norway AS | Norway | |
| FaBric Sales AB & Co. KG | Germany |
During the year the following subsidiaries merged into H & M Hennes & Mauritz AB. The merger of wholly-owned limited companies took place through absorption. The effective date for all of the mergers was 28 October 2009. The companies being absorbed were not active during the 2009 fi nancial year. According to the Swedish Accounting Standards Board's recommendation BFNAR 1999:1 item 24, the amounts of the merged assets and liabilities are not stated in the published version of the annual accounts as the amounts are insignifi cant.
| 556005-5047 | Big is Beautiful, BiB AB |
|---|---|
| 556027-7351 | Carl Axel Petterssons AB |
| 556030-1052 | K.E. Persson AB |
| 556056-0889 | AB Hennes |
| 556099-0706 | Carl-Axel Herrmode AB |
| 556125-1421 | Mauritz AB |
| PARENT COMPANY | |||
|---|---|---|---|
| 2009 | 2008 | ||
| Tax allocation reserve tax 09 | 662 | 662 | |
| Tax allocation reserve tax 10 | 43 | – | |
| Depreciation in excess of plan | 120 | 120 | |
| Total | 825 | 782 |
| PARENT COMPANY | |||
|---|---|---|---|
| 2009 | 2008 | ||
| Parent company's lease guarantees | 11,292 | 11,751 | |
| Total | 11,292 | 11,751 |
Return on equity:
Profi t for the year in relation to average shareholders' equity.
Profi t after fi nancial items plus interest expense in relation to average shareholders' equity plus average interest-bearing liabilities.
Shareholders' equity plus deferred tax liability in relation to the balance sheet total.
Shareholders' equity in relation to the balance sheet total.
Shareholders' equity divided by number of shares.
Price per share divided by earnings per share.
Comparable units refers to the stores and the internet and catalogue sales countries that have been in operation for at least one fi nancial year. H&M's fi nancial year is from 1 December to 30 November.
The undersigned hereby provide an assurance that the Annual Report and consolidated accounts have been drawn up in accordance with IFRS international accounting standards, as adopted by the EU, with good accounting practice, and that they provide a true and fair view of the Group's and the parent company's position and earnings, and also that the Administration Report provides a true and fair view of the development of the Group's and the parent company's business, position and earnings, and also describe the signifi cant risks and uncertainties faced by the companies making up the Group.
Stockholm, 27 January 2010
STEFAN PERSSON MIA BRUNELL LIVFORS LOTTIE KNUTSON
KARL-JOHAN PERSSON Managing Director
Chairman of the Board Board member Board member
SUSSI KVART BO LUNDQUIST STIG NORDFELT Board member Board member Board member
Board member Board member Board member
MARIANNE BROMAN MELKER SCHÖRLING MARGARETA WELINDER
Our audit report was submitted on 28 January 2010
Ernst & Young AB
Erik Åström Authorised Public Accountant
To the Annual General Meeting of H & M Hennes & Mauritz AB (publ) Corporate identity number 556042-7220
We have audited the annual accounts, consolidated accounts, accounting records and the administration of the Board of Directors and the Managing Director of H & M Hennes & Mauritz AB for the fi nancial year 1 December 2008 to 30 November 2009. The company's annual accounts and consolidated accounts are included in this document on pages 4 – 31. These accounts, the administration of the company and compliance with the Annual Accounts Act in the preparation of the annual report and the application of IFRS international accounting standards, as adopted by the EU, and of the Annual Accounts Act to the consolidated accounts are the responsibility of the Board of Directors and the Managing Director. Our responsibility is to express an opinion on the annual accounts, the consolidated accounts and the administration based on our audit.
Our audit was conducted in accordance with generally accepted auditing standards in Sweden. This means that we planned and performed the audit in order to obtain a high, but not absolute, degree of assurance that the annual accounts and consolidated accounts are free from material misstatement. An audit includes examinating, on a test basis, evidence supporting the amounts and disclosures in the accounts. An audit also includes assessing the accounting principles used and their application by the Board and the Managing Director and evaluating the signifi cant assessments made by the Board and the Managing Director in preparing
the annual accounts and consolidated accounts, as well as assessing the overall presentation of information in the annual accounts and the consolidated accounts. As a basis for our opinion concerning discharge from liability, we examined signifi cant decisions, actions taken and circumstances in the company to be able to determine the liability, if any, to the company of any Board member or the Managing Director. We also examined whether any Board member or the Managing Director has, in any other way, acted in contravention of the Companies Act, the Annual Accounts Act or the Articles of Association. We believe that our audit provides a reasonable basis for our opinion set out below.
The annual report has been prepared in accordance with the Annual Accounts Act and gives a true and fair view of the company's and the Group's earnings and fi nancial position in accordance with generally accepted accounting principles in Sweden.
The consolidated accounts have been compiled in accordance with IFRS international accounting standards, as adopted by the EU, and the Annual Accounts Act and give a true and fair view of the Group's earnings and fi nancial position. The administration report is consistent with the other section of the annual accounts and the consolidated accounts.
We recommend to the Annual General Meeting that the income statement and balance sheet of the parent company and the Group be adopted, that the profi t for the parent company be dealt with in accordance with the proposal in the administration report and that the members of the Board of Directors and the Managing Director be discharged from liability for the fi nancial year.
Stockholm, 28 January 2010
Ernst & Young AB
Erik Åström Authorised Public Accountant
| FINANCIAL YEAR | 2009 | 2008 | 2007 | 2006 | 2005 |
|---|---|---|---|---|---|
| Sales including VAT, SEK m | 118,697 | 104,041 | 92,123 | 80,081 | 71,886 |
| Sales excluding VAT, SEK m | 101,393 | 88,532 | 78,346 | 68,400 | 61,262 |
| Change from previous year, % | +15 | +13 | +15 | +12 | +14 |
| Operating profi t, SEK m | 21,644 | 20,138 | 18,382 | 15,298 | 13,173 |
| Operating margin, % | 21.3 | 22.7 | 23.5 | 22.4 | 21.5 |
| Depreciation for the year, SEK m | 2,830 | 2,202 | 1,814 | 1,624 | 1,452 |
| Profi t after fi nancial items, SEK m | 22,103 | 21,190 | 19,170 | 15,808 | 13,553 |
| Profi t after tax, SEK m | 16,384 | 15,294 | 13,588 | 10,797 | 9,247 |
| Liquid funds and short-term investments, SEK m | 22,025 | 22,726 | 20,964 | 18,625 | 16,846 |
| Stock-in-trade, SEK m | 10,240 | 8,500 | 7,969 | 7,220 | 6,841 |
| Equity, SEK m | 40,613 | 36,950 | 32,093 | 27,779 | 25,924 |
| Number of shares, thousands* | 827,536 | 827,536 | 827,536 | 827,536 | 827,536 |
| Earnings per share, SEK* | 19.80 | 18.48 | 16.42 | 13.05 | 11.17 |
| Equity per share, SEK* | 49.08 | 44.65 | 38.78 | 33.57 | 31.33 |
| Cash fl ow from current operations per share, SEK* | 20.92 | 21.71 | 18.59 | 14.57 | 12.25 |
| Dividend per share, SEK | 16.00** | 15.50 | 14.00 | 11.50 | 9.50 |
| Return on shareholders' equity, % | 42.2 | 44.3 | 45.4 | 40.2 | 38.4 |
| Return on capital employed, % | 56.7 | 61.1 | 63.7 | 58.7 | 56.3 |
| Share of risk-bearing capital, % | 78.5 | 75.7 | 78.5 | 80.0 | 80.2 |
| Equity/assets ratio, % | 74.7 | 72.1 | 76.9 | 78.1 | 78.1 |
| Total number of stores | 1,988 | 1,738 | 1,522 | 1,345 | 1,193 |
| Average number of employees | 53,476 | 53,430 | 47,029 | 40,855 | 34,614 |
* Before and after dilution.
** Proposed by the Board of Directors.
Defi nitions of key fi gures, see Note 27.
The International Financial Reporting Standards (IFRS) are applied from 2005/2006. The restatement of the 2004/2005 fi gures according to IFRS has not involved any adjustment.
Corporate governance is basically about how companies are to be run in order to safeguard the interests of the shareholders.
H&M applies the Swedish Code of Corporate Governance and has therefore prepared this corporate governance report in accordance with the Code. This corporate governance report for 2009 describes H&M's corporate governance, management and administration as well as internal control of fi nancial reporting. The report is not part of the formal Annual Report and has not been reviewed by the company's auditors.
The Code is based on the principle "comply or explain," which means that companies applying the Code may deviate from individual rules provided they give an explanation of the deviation, describe the chosen alternative and provide the reasons for the deviation.
– The Chairman of the Board is the chairman of the Election Committee. The reason for this is described in the section on the Election Committee.
H&M's corporate governance is regulated by both external regulations and internal control documents.
Examples of external regulations:
– the Swedish Companies Act
– accounting legislation including the Swedish Bookkeeping
Act and Annual Accounts Act
– NASDAQ OMX Stockholm AB Rules for issuers
– Swedish Code of Corporate Governance
Examples of internal control documents: – Articles of Association – instructions and work plan for the Board of Directors and the Managing Director – Code of Ethics – policies and guidelines
The general meeting is the company's highest decision-making body and is the forum in which shareholders exercise their right to decide on the company's affairs. The shareholders registered directly in the register of shareholders and who have given notice of their attendance on time are entitled to participate in the meeting and vote for the total number of shares they hold. The shareholders who cannot be present in person may be represented by proxy.
The general meeting is convened once a year in order to carry out tasks such as adopting the annual accounts and consolidated accounts, discharging the members of the Board of Directors and the Managing Director from liability and deciding how the profi t for the past fi nancial year is to be allocated. The meeting is called the Annual General Meeting (AGM) and elects the Board of Directors and, when necessary, auditors for the forthcoming period of offi ce. Extraordinary general meetings may be convened where there is a particular need to do so. At the end of the fi nancial year H&M had 172,057 shareholders. H&M's share is listed on NASDAQ OMX Stockholm AB. Information materials from H&M's most recent Annual General Meetings are published under Investor Relations/Corporate Governance/Annual General Meeting at www.hm.com. Here there is also information about the right of shareholders to raise matters at the meeting and when such requests must be received by H&M so that the matter is certain to be included in the agenda in the notice to attend. The e-mail address is indicated for those shareholders who wish to submit their questions in advance to H&M.
H&M's Annual General Meeting was held on 4 May 2009 in Victoriahallen at the Stockholm International Fairs. 1,404 shareholders participated in the meeting, representing 81.3 percent of the votes and 61.5 percent of the capital. H&M's Board of Directors, executive management and Election Committee as well as the company's two auditors attended the meeting.
The main resolutions passed were the following:
– Lawyer Sven Unger was elected as chairman of the meeting. – The balance sheets and income statements for the parent company and the Group were adopted.
– A dividend to shareholders of SEK 15.50 per share was approved. – The Board members and the Managing Director were discharged from liability for the 2007/2008 fi nancial year.
– The number of Board members elected by the meeting to serve until the next AGM was set at seven with no deputies elected by the meeting.
– Mia Brunell Livfors, Lottie Knutson, Sussi Kvart, Bo Lundquist, Stig Nordfelt, Stefan Persson and Melker Schörling were re-elected as ordinary members by the AGM. Fred Andersson had declined re-election and Karl-Johan Persson, who took over as the new Managing Director and CEO of H&M on 1 July 2009, resigned his position on the Board at the AGM. Stefan Persson was re-elected as Chairman of the Board. – The fees paid to the Board members until the next AGM were set at SEK 3,875,000 in total, to be distributed as follows: Chairman of the Board, SEK 1,350,000; Board members, SEK 375,000; members of the Auditing Committee an extra SEK 75,000; and the chairman of the Auditing Committee, an extra SEK 125,000.
– The accounting fi rm Ernst & Young AB was elected as auditor for the company for a four-year period, i.e. until the end of the 2013 AGM.
– The proposed principles for the Election Committee were approved.
– The proposed guidelines for remuneration for senior executives were approved.
The minutes from the Annual General Meeting were posted on the website within two weeks of the meeting. Materials from the meeting, such as the notice to attend the meeting, the Board's statement concerning allocation of profi ts and the Managing Director's address and presentation and the minutes etc. were translated into English and published on the website.
Votes and capital represented at H&M's Annual General Meetings
| YEAR % OF VOTES |
% OF CAPITAL |
|---|---|
| 2007 80.9 |
60.7 |
| 2008 80.9 |
60.7 |
| 2009 81.3 |
61.5 |
H&M's Annual General Meeting 2010 will be held on Thursday, 29 April in Victoriahallen at the Stockholm International Fairs. To register to attend the 2010 AGM, see H&M in Figures 2009 page 47 or www.hm.com under Investor Relations/Corporate Governance/Annual General Meeting 2010.
The Election Committee is the general meeting's body that prepares the necessary information as a basis for decisions at the general meeting as regards election of the Board of Directors, Chairman of the Board, auditors and the chairman of the Annual General Meeting, as well as fees to the Board and auditors, and principles for the Election Committee. An account of the work of the Election Committee ahead of each AGM is available in a separate document on the website. Starting from the 2008 Annual General Meeting, the members of H&M's Election Committee are elected by the general meeting.
The members of the Election Committee were elected by the 2009 AGM. The Election Committee was elected on the basis of its principles, which, in brief, state that the Election Committee shall be made up of the Chairman of the Board and four other members, each representing one of the four biggest shareholders as of 28 February 2009, apart from the shareholder that the Chairman of the Board represents. The principles include a procedure for replacing any member who leaves the Election Committee before the Committee's work is complete. To read the principles in full, see the document "Account of the work of H&M's Election Committee 2009" under Investor Relations/ Corporate Governance/Election Committee at www.hm.com.
The composition of the Election Committee following election at the 2009 AGM was:
– Stefan Persson, Chairman of the Board – Lottie Tham, representing Lottie Tham – Staffan Grefbäck, representing Alecta – Jan Andersson, representing Swedbank Robur Fonder – Peter Lindell, representing AMF Pension
The composition of the Election Committee meets the Code's requirement with respect to independent members.
H&M deviated from Code rule 2.4 which states, among other things, that the Chairman of the Board shall not be the chairman of the Election Committee. The Election Committee appointed Chairman of the Board Stefan Persson as chairman of the Election Committee during the year on the grounds that this is deemed an obvious choice in view of the ownership structure of H&M.
Since the 2009 AGM the Election Committee has held two meetings at which minutes were taken and the Committee was also in contact between these meetings. At the Election Committee's fi rst meeting Stefan Persson gave a verbal account of the work of the Board during the year. The conclusion was that the Board had worked effectively over the course of the year.
The Board's work is presented so that the Election Committee can make the best possible assessment of the Board's competence and experience. The Election Committee also discussed the size of the Board, its composition and fees for Board members.
No special fees were paid to the Election Committee's chairman or to any of the other members of the Election Committee.
The Election Committee's work in preparation for the next AGM is not yet complete and more information will be presented before the 2010 AGM.
Shareholders wishing to submit proposals to the Election Committee can do so either to individual members of the Election Committee or by letter to:
H & M Hennes & Mauritz AB Election Committee 106 38 Stockholm Sweden [email protected]
The task of the Board of Directors is to manage the company's affairs on behalf of the shareholders. The Board members are elected by the shareholders at the Annual General Meeting for the period until the next AGM. Under Swedish law, trade unions have the right to appoint employee representatives with deputies to the company's Board.
In addition to laws and recommendations, H&M's Board work is regulated by the Board's work plan which contains rules on the distribution of work between the Board and the Managing Director, fi nancial reporting, investments and fi nancing. The work plan, which also contains a work plan for the Auditing Committee, is established once a year.
According to the Articles of Association, H&M's Board is to consist of at least three but no more than twelve members elected by the AGM and no more than the same number of deputies.
The Annual General Meeting determines the exact number of Board members. Since the 2009 AGM the Board has consisted of seven ordinary members and no deputies. There are also two employee representatives and two deputies for these positions. The Board is comprised of seven women and four men and four out of eleven are employed by the company. For facts on H&M's Board members, see page 42. The Board members are to devote the time and attention that their assignment for H&M requires. New Board members receive introductory instruction which, among other things, includes meetings with the heads of various functions.
During the fi nancial year, H&M normally holds fi ve regular board meetings and one statutory board meeting. Extraordinary board meetings are held when the need arises. The Managing Director attends all board meetings, except when the Managing Director's work is being evaluated. The Managing Director reports to the Board on the operational work within the Group and ensures that the Board is given relevant and objective information on which to base its decisions. Other members of the management team, such as the CFO and Chief Accountant, also attend in order to provide the Board with fi nancial information. The Board is assisted by a secretary who is not a member of the Board.
H&M's Board held six Board meetings and one statutory meeting during the fi nancial year. One of the meetings is usually an extended meeting and in 2009 it took place in Copenhagen in Denmark and included a visit to a number of stores.
The attendance of the Board members is reported in the table entitled "Composition of the Board of Directors and Attendance in 2009." The former Managing Director Rolf Eriksen attended all of the Board meetings until 30 June 2009. Karl-Johan Persson, in his role as Managing Director, has attended all Board meetings from 1 July 2009.
The Board meetings begin with a discussion of the company's fi nancial situation, with sales, costs and results as the main focus. The Board takes decisions on the interim reports and the Annual Report. Accounting and auditing matters are dealt with within the Auditing Committee and reported back to the Board.
Matters dealt with at the Board meetings in 2009 included the company's main aims for the year, sales development, the focus on costs, currency hedging, the rate of expansion and the results of expansion into for example Russia, Beijing and Lebanon. The Board also reviewed the executive management team's updated risk assessment. In addition, the Managing Director reported on the status of concepts such as COS and H&M Home, the integration of FaBric Scandinavien AB as well as developments in the buying process and internet and catalogue sales, future marketing campaigns, the refurbishment of stores, development of IT support, preparations for expansion into South Korea and the franchise countries, Israel and Jordan etc. The Board has kept itself informed of the company's CSR and environmental work. Decisions taken by the Board in 2009 included among other things the following: the launch of internet sales in the UK in 2010, investments for the total number of stores and the level of the investments.
A committee within the Board consisting of Stefan Persson, Melker Schörling and Bo Lundquist handled the managing director issue as Rolf Eriksen had announced that he would retire in 2009. The Board appointed Karl-Johan Persson, formerly Head of H&M's expansion, Business development, Brand and new business as the new Managing Director and CEO for H & M Hennes & Mauritz AB, taking up the position on 1 July 2009. The Board believes that Karl-Johan Persson has the background, competence and experience needed to lead H&M into the future. Karl-Johan Persson knows the company well and understands its culture. He also has excellent leadership skills.
During the year the Board discussed strategic matters such as competition and development opportunities, and also revised its fi nancial policy. In connection with the Board's review of the proposed Annual Report for 2009, auditor Erik Åström gave an account of the year's audit work.
| NAME | YEAR | INDEPENDENT 1) INDEPENDENT2) | FEES 3) (SEK) | BOARD MEETINGS |
AUDITING COMMITTEE |
SHARE– HOLDING |
SHARES HELD BY RELATED PARTIES |
|
|---|---|---|---|---|---|---|---|---|
| Stefan Persson, Chairman | 1979 | No | No | 1,350,000 | 7/7 | 186,274,400 | 97,200,000 4) 3,200,000 5) |
|
| Fred Andersson 6) | 1990 | Yes | Yes | 375,000 | 3/4 | 800 | ||
| Mia Brunell Livfors | 2008 | Yes | Yes | 375,000 | 7/7 | 300 7) | ||
| Lottie Knutson | 2006 | Yes | Yes | 375,000 | 7/7 | 600 | ||
| Sussi Kvart | 1998 | Yes | Yes | 450,000 | 7/7 | 4/4 | 2,200 | 850 |
| Bo Lundquist | 1995 | Yes | Yes | 450,000 | 7/7 | 4/4 | 20,000 8) | |
| Stig Nordfelt | 1987 | Yes | Yes | 500,000 | 7/7 | 4/4 | 4,000 | |
| Karl-Johan Persson 6) | 2006 | No | No | – | 3/4 | 6,066,000 | ||
| Melker Schörling | 1998 | Yes | No | 375,000 | 6/7 | 114,000 9) | ||
| Marianne Broman, employee rep. |
1995 | No | No | 7/7 | 70 | 145 | ||
| Margareta Welinder, employee rep. |
2007 | No | No | 5/7 | ||||
| Tina Jäderberg, deputy employee rep. |
2007 | No | No | 7/7 | ||||
| Agneta Ramberg, deputy employee rep. |
1997 | No | No | 6/7 |
1) Independent of the company and company management in accordance with the Swedish Code of Corporate Governance.
2) Independent of major shareholders in the company in accordance with the Swedish Code of Corporate Governance.
3) Fees as resolved at the 2008 Annual General Meeting. The fees relate to the period until the next AGM is held and have been paid out during 2009.
4) Class A shares owned through Ramsbury Invest AB.
5) Class B shares owned through Ramsbury Invest AB.
6) Fred Andersson and Karl-Johan Persson resigned from the Board at the 2009 AGM. 7) Shares held together with related parties
8) Shares owned through Bo Lundquist's company Smideseken AB.
9) Shares owned through Melker Schörling AB.
There are no outstanding share or share price related incentive programmes for the Board of Directors.
The composition of H&M's Board meets the independence requirements set by NASDAQ OMX Stockholm AB and the Code. This means that the majority of the Board members elected by the general meeting are independent of the company and company management. At least two of these are also independent of the company's major shareholders.
H&M's fi nancial reporting is carried out in compliance with the laws, statutes, agreements and recommendations that apply to companies listed on NASDAQ OMX Stockholm AB. It falls to the Board of Directors to ensure the quality of fi nancial reporting with the help, for example, of the Auditing Committee (see text below). More information is available in the section on internal control of fi nancial reporting.
The Board's Auditing Committee is responsible for making preparations for the Board's work on quality assurance of the company's fi nancial reporting and internal control. The Committee is also the main channel of communication between the Board and the company's auditors. This work involves handling auditing issues and fi nancial reports published by the company.
H&M's Auditing Committee is made up of three Board members. The Committee is appointed annually by the Board of Directors at the statutory Board meeting held in conjunction with the AGM. The Auditing Committee, which consists of chairman Stig Nordfelt and members Sussi Kvart and Bo Lundquist, has held four meetings at which minutes were taken in 2009. The Auditing Committee's composition meets the Code's requirements with respect to independent members.
Authorised Public Accountant Erik Åström attended the Auditing Committee meetings and reported on the auditing assignments. The meetings were also attended by Jyrki Tervonen, CFO and Anders Jonasson, Chief Accountant, among others. The Committee's meetings are minuted and the minutes are then distributed to the Board members.
During the year the Committee addressed issues concerning the company's fi nancial reporting including interim reports and the Annual Report. The Auditing Committee checks that the company effectively carries out its internal control and risk management processes. During the year the Auditing Committee discussed the company's currency hedging policy and the monitoring of the internal pricing model, and gathered information on the scope and focus of auditing assignments, as well as on integration of FaBric Scandinavien and IT development within the Group.
The auditors are appointed by the shareholders at the Annual General Meeting every four years. The Auditors scrutinise the company's annual fi nancial statements, consolidated statements and accounts, and the management of the company by the Board and Managing Director.
At the 2009 AGM the registered accounting fi rm Ernst & Young AB was elected as auditor for H&M for a four-year period, i.e. until the end of the 2013 Annual General Meeting. Authorised Public Accountant Erik Åström from Ernst & Young holds the main responsibility for auditing assignments.
As previously, the 2009 AGM resolved that the auditors' fees should be paid based on the invoices submitted.
Ernst & Young AB is a member of a global network used for auditing assignments for most of the Group companies and meets H&M's requirements with respect to competence and geographical coverage. The auditors' independent status is guaranteed partly by legislation and professional ethics rules, partly by the accounting fi rm's internal guidelines and partly by the Auditing Committee's guidelines regulating which assignments the accounting fi rm is permitted to conduct in addition to the audit.
Authorised Public Accountant Erik Åström conducts auditing assignments for a number of listed companies, such as Hakon Invest, Modern Times Group, Saab, Svenska Handelsbanken and Apoteket.
The fees invoiced by the auditors over the past three fi nancial years are as follows:
| GROUP | PARENT COMPANY | |||||
|---|---|---|---|---|---|---|
| 2009 | 2008 | 2007 | 2009 | 2008 | 2007 | |
| Ernst & Young | ||||||
| Audit assignments | 16.7 | 14.5 | 12.8 | 2.2 | 2.2 | 2.4 |
| Other assignments | 15.2 | 14.0 | 18.4 | 0.1 | 0.6 | 11.5 |
| Other auditors | ||||||
| Audit assignments | 3.2 | 2.9 | 2.5 | – | – | – |
| Other assignments | 1.8 | 1.1 | 1.3 | – | – | – |
| Total | 36.9 | 32.5 | 35.0 | 2.3 | 2.8 | 13.9 |
The Managing Director is appointed by the Board of Directors and is responsible for the daily management of the company as directed by the Board. This means that the Managing Director must place particular importance on recruiting senior executives, buying and logistics matters, pricing strategy and sales, marketing, expansion, development of the stores, internet and catalogue sales and IT development. The Managing Director reports to the Board on H&M's development and makes the necessary preparations for taking decisions on investments, expansion, etc. The role of Managing Director includes contact with the fi nancial markets, the media and the authorities.
Rolf Eriksen, who retired in 2009, was Managing Director of H&M until 30 June 2009. Karl-Johan Persson took over as Managing Director on 1 July 2009.
Karl-Johan Persson, born in 1975, has been the Managing Director and Chief Executive Offi cer of H & M Hennes & Mauritz AB since 1 July 2009.
Before taking over as Managing Director, Karl-Johan Persson held an operational role within H&M from 2005, including working as Head of expansion, Business development and Brand and new business. Karl-Johan Persson has since 2000 been a member of the boards of H&M's subsidiaries in Denmark, Germany, the US and the UK. Between the years 2006 and 2009 he was also a member of the Board of H&M's parent company.
Between 2001 and 2004 Karl-Johan Persson was CEO of European Network. Karl-Johan holds a BA in Business Administration from the European Business School in London.
His current external board assignments are the Swedish Chamber of Commerce in the UK and the GoodCause foundation. Karl-Johan Persson's H&M shareholding amounts to 6,066,000 shares.
H&M has a matrix organisation in which country managers and the members of the executive management team report directly to the Managing Director (see section on control environment). The matrix organisation consists of the sales countries, headed by the country managers, and the central functions/departments for which the executive management team is responsible.
In addition to the Managing Director, the executive managements team comprises twelve people, fi ve of whom are women. These are responsible for the following functions: Finance, Buying, Production, Sales, Expansion, Accounting, Human Resources, Marketing, Communications, IR, Security and Corporate Social Responsibility.
In accordance with the Swedish Companies Act the 2009 Annual General Meeting adopted guidelines for remuneration of senior executives within H&M. To view the full guidelines, please refer to the Administration Report on page 6 of H&M in fi gures 2009.
H&M has no remuneration committee since the Board of Directors deems it more appropriate for the entire Board to carry out the tasks of a remuneration committee. The Board prepares proposals for guidelines for remuneration to senior executives and these proposals are presented at the Annual General Meetings. The Board decides on the Managing Director's salary according to the guidelines adopted at the 2009 AGM. The terms of employment for other senior executives are decided by the Managing Director and the Chairman of the Board. No severance pay agreements exist within H&M other than for the Managing Director.
LOTTIE KNUTSON Board member
MARGARETA WELINDER Employee representative
STIG NORDFELT Board member and Chairman of the Auditing Committee BO LUNDQUIST Board member and member of the Auditing Committee
TINA JÄDERBERG Deputy employee representative
STEFAN PERSSON Chairman of the Board AGNETA RAMBERG Deputy employee representative
MIA BRUNELL LIVFORS Board member
MELKER SCHÖRLING Board member
MARIANNE BROMAN Employee representative
SUSSI KVART Board member and member of the Auditing Committee
Chairman of the Board. Born 1947.
Member of the board of MSAB and board assignments in family-owned companies.
Studies at the Stockholm University and Lund University, 1969–1973.
Country Manager for H&M in the UK and responsible for H&M's expansion abroad. 1982 – 1998 Managing Director and Chief Executive Offi cer of H&M.
1998 – Chairman of the Board of H&M.
Board member. Born 1965.
Managing Director and Chief Executive Offi cer of Investment AB Kinnevik.
Member of the boards of Efva Attling Stockholm AB, Metro International S.A., Tele2 AB, Transcom WorldWide S.A., Korsnäs AB and Mellersta Sveriges Lantbruks AB since 2006, and Millicom International Cellular S.A. and Modern Times Group MTG AB since 2007.
Economics, Stockholm University.
Board member. Born 1964.
Marketing Director at Fritidsresor Group Nordic with responsibility for marketing, communications as well as corporate social responsibility.
No positions other than as member of the Board of H&M.
Université de Paris III, Diplôme de Culture Française, 1985 – 1986. Theatre History, Stockholm University, 1989. Department of Journalism at Stockholm University, 1987 – 1989.
Board member and member of the Auditing Committee. Born 1956.
Consulting, with a focus on strategic business advice, corporate governance and board procedures.
Chairman of Kvinvest AB. Member of the boards of Healthcare Provision – Stockholm County Council, Stockholms Stadshus AB, Transparency International Sweden and DGC One AB.
Bachelor of Laws, Lund University 1980.
Board member and member of the Auditing Committee. Born 1942.
Head of family-owned investment company. Board assignments.
Chairman of the Boards of Stockholm University College of Physical Education and Sports (GIH) and Teknikmagasinet AB (unlisted company), and member of the board of Frans Svanström AB (unlisted company). Member of the board of the Anders Wall Foundation for Free Enterprise.
M.Sc. Engineering, Chalmers University of Technology Gothenburg 1968.
Board member and chairman of the Auditing Committee. Born 1940.
Consulting, with a focus on board procedures.
Member of the board of Capinordic Asset Management AB.
M.Sc. Business and Economics from the School of Business, Economics and Law, Gothenburg University, 1963.
Board member. Born 1947.
Founder and owner of MSAB.
Chairman of MSAB, AarhusKarlshamn AB, Hexagon AB, Hexpol AB and Securitas AB.
M.Sc. Business and Economics from the School of Business, Economics and Law, Gothenburg University, 1970.
Employee representative on the H&M Board since 1995. Born 1944.
Employee representative on the H&M Board since 2007. Born 1962.
Deputy employee representative on the H&M Board since 2007. Born 1974.
Deputy employee representative on the H&M Board since 1997. Born 1946.
This description of H&M's internal control and risk management has been prepared in accordance with sections 10.5 and 10.6 of the Swedish Code of Corporate Governance. The description is not part of the formal Annual Report.
The Board of Directors is responsible for the company's internal control, the overall aim of which is to safeguard the company's assets and thereby its shareholders' investment. Internal control and risk management are part of the Board's and the management's control and follow-up responsibilities the purpose of which is to ensure that the business is managed in the most appropriate and effective manner possible.
H&M uses the COSO framework as a basis for internal control with respect to fi nancial reporting. The COSO framework, which is issued by the Committee of Sponsoring Organizations of the Treadway Commission, is made up of fi ve components: control environment, risk assessment, control activities, information and communication as well as monitoring.
The control environment forms the basis of internal control, because it includes the culture that the Board and management communicate and by which they work. The control environment is made up primarily of ethical values and integrity, expertise, management philosophy, organisational structure, responsibility and authority, policies and guidelines, as well as routines.
Of particular importance is that management documents such as internal policies, guidelines and manuals exist in signifi cant areas and that these provide the employees with solid guidance. Within H&M there exists above all a Code of Ethics; a policy that permeates the entire company since it describes the way in which the employees should act within the company and in business transactions with suppliers.
H&M's internal control structure is based on:
– The division of work between the Board of Directors, the Auditing Committee and the Managing Director, which is clearly described in the Board's formal work plan. The executive management team and the Auditing Committee report regularly to the Board based on established routines.
– The company's organisation and way of carrying on business, in which roles and the division of responsibility are clearly defi ned. – Policies, guidelines and manuals; of these, the Code of Ethics, the fi nancial policy, the information policy, the communications policy and the store instructions are examples of important overall policies.
– Awareness among the employees of the maintenance of effective control over fi nancial reporting.
– Control activities, checks and balances, analysis, reporting.
H&M has a matrix organisation, which means that those on the executive management team are responsible for performance within their function in each country (the vertical arrows). The country managers are responsible for profi tability in their country and thereby have overall responsibility for all the functions within their operations (the horizontal arrows). The country organisation is in turn divided into regions, with a number of stores in each region.
All the companies within the H&M Group have the same structure and accounting system with the same chart of accounts. This simplifi es the creation of appropriate routines and control systems, which facilitates internal control and comparisons between the various companies.
There are detailed instructions for the store staff that control daily work in the stores. Many other guidelines and manuals are also available within the Group. In most cases these are drawn up in the central departments at the head offi ce in Stockholm
| Central functions/departments* | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Sales countries |
Finance/ accounts |
Sales | Buying | Production | Expansion | Marketing | Information | HR | CSR | Security |
| Country 1 | ||||||||||
| Country 2 | ||||||||||
| Country 3 | ||||||||||
| Country 4 | ||||||||||
| Country 5 | ||||||||||
| etc. |
* Executive management team
and then communicated to the respective department in the country offi ces. Each central department regularly reviews its guidelines and manuals to see which ones need updating and whether new guidelines need to be developed.
H&M carries out regular risk analysis to review the risks of errors within its fi nancial reporting. At the end of each fi nancial year the main risks within fi nancial reporting are updated in a group-wide document. The same is done for operational risk. These documents are reviewed by the Auditing Committee and then sent on to the Board of Directors.
Operational risks are also documented on an ongoing basis. During the year the overall risk analysis was updated in order to obtain a general idea of the main risks within each function as well as the systems and methods that are in place to minimise any impact of a risk.
Where fi nancial reporting is concerned, H&M has identifi ed certain areas with a higher intrinsic risk of errors, including stockin-trade shrinkage, cash-desk manipulation, misappropriation of merchandise and the impact of exchange rate fl uctuation and taxes.
For a more detailed description of H&M's risks, see the Administration Report, page 8 and Note 2 Financial risks, page 21 in H&M in Figures 2009.
To limit the risks there are appropriate policies and guidelines as well as processes and controls within the business.
There are a number of control activities built into every process to ensure that the business is run effectively and that fi nancial reporting on every reporting occasion provides a fair and true picture. The control activities, which aim to prevent, fi nd and correct inaccuracies and non-compliance, are at all levels and in all parts of the organisation. Within H&M the control activities include effective control and analysis of sales statistics, account reconciliation, and monthly accounts as well as analysis of these. H&M's fi nancial statements are analysed and both manual controls and feasibility assessments are made.
IT systems are scrutinised regularly during the year to ensure the validity of H&M's IT systems with respect to fi nancial reporting. In 2009 IT controls in certain business processes were scrutinised by an external party with those responsible for systems and system areas within H&M.
Policies and guidelines are of particular importance for accurate accounting, reporting and provision of information, and also defi ne the control activities to be carried out. H&M's policies and guidelines relating to fi nancial reporting are updated on an ongoing basis. This takes place primarily within each central function and is communicated to the sales countries via e-mail and intranet as well as at meetings.
H&M has a communications policy providing guidelines for communication with external parties. The purpose of the policy is to ensure that all information obligations are met and that the information provided is accurate and complete.
Financial information is provided via:
– H&M's Annual Report
– Interim reports, the full year report and monthly sales reports – Press releases on events that may signifi cantly impact the share price
– H&M's website www.hm.com
As part of the company's 2009 internal control work, the central departments carried out assessments of the respective functions in the sales countries using the COSO model based partly on general issues and partly on department-specifi c issues. This work resulted in a plan of action for each central department containing the areas that should be improved to further strengthen internal control.
At the stores, annual controls are performed by internal shop controllers with the aim of determining the strengths and weaknesses of the stores and how any shortcomings can be corrected. Follow-up and feedback with respect to any deviations found during the assessment of internal control constitute a central part of internal control work.
The Board of Directors and the Auditing Committee continuously evaluate the information provided by the executive management team, including information on internal control. The Auditing Committee's task of monitoring the effi ciency of internal control by the management team is of particular interest to the Board. This work includes checking that steps are taken with respect to any problems detected and suggestions made during the assessment by the central departments and internal shop controllers as well as by external auditors. The work on internal control during the year has further increased awareness of internal control within the Group and improvements are being made on a continuous basis.
In the company's opinion, the assessment and monitoring of internal control carried out in the sales countries by all the central departments – such as Accounts, Communications, Security, Logistics and Production etc. – as well as the work carried out by internal shop controllers are well in line with the work performed in other companies by an internal audit department. H&M's Board has therefore not found it necessary to establish a specifi c internal audit department. The issue of a specifi c internal audit department will be reviewed again in 2010.
Stockholm, January 2010
More information on H&M's corporate governance work can be found in the section on Corporate Governance under Investor Relations at www.hm.com.
| KEY RATIOS PER SHARE | 2009 | 2008 | 2007 | 2006 | 2005 |
|---|---|---|---|---|---|
| Shareholders' equity per share, SEK | 49.08 | 44.65 | 38.78 | 33.57 | 31.33 |
| Earnings per share, SEK | 19.80 | 18.48 | 16.42 | 13.05 | 11.17 |
| Change from previous year, % | +7 | +13 | +26 | +17 | +27 |
| Dividend per share, SEK | 16.00* | 15.50 | 14.00 | 11.50 | 9.50 |
| Market price on 30 November, SEK | 412.30 | 298.00 | 399.00 | 319.00 | 253.00 |
| P/E ratio | 21 | 16 | 24 | 24 | 23 |
* Board's proposal.
| SHAREHOLDINGS | NO. OF SHAREHOLDERS | % | NO. OF SHARES | % | AVERAGE SHARES PER SHAREHOLDER |
|---|---|---|---|---|---|
| 1 – 1,000 | 160,702 | 93.4 | 29,132,149 | 3.5 | 181 |
| 1,001 – 5,000 | 8,558 | 5.0 | 18,965,696 | 2.3 | 2,216 |
| 5,001 – 10,000 | 1,185 | 0.7 | 8,746,473 | 1.1 | 7,381 |
| 10,001 – 50,000 | 1,057 | 0.6 | 22,398,802 | 2.7 | 21,191 |
| 50,001 – 100,000 | 177 | 0.1 | 12,699,713 | 1.5 | 71,750 |
| 100,001 – | 378 | 0.2 | 735,593,167 | 88.9 | 1,946,014 |
| Total | 172,057 | 100 | 827,536,000 | 100 | 4,810 |
| MAJOR SHAREHOLDERS, 30 NOVEMBER 2009 | NO. OF SHARES | % OF VOTING RIGHTS | % OF TOTAL SHARES |
|---|---|---|---|
| Stefan Persson and family | 304,872,400 | 69.3 | 36.8 |
| Lottie Tham and family | 44,040,200 | 2.6 | 5.3 |
| Alecta Pensionsförsäkring | 28,685,000 | 1.7 | 3.5 |
| JP Morgan Chase Bank | 27,483,130 | 1.6 | 3.3 |
| Swedbank Robur Fonder | 20,036,338 | 1.2 | 2.4 |
| AMF Pensionsförsäkring | 15,421,912 | 0.9 | 1.9 |
| Clearstream Banking | 14,604,117 | 0.9 | 1.8 |
| Handelsbanken Fonder | 13,572,452 | 0.8 | 1.6 |
| SSB CL Omnibus AC | 12,436,921 | 0.7 | 1.5 |
| Folksam KPA Förenade Liv | 8,979,005 | 0.5 | 1.1 |
The Annual General Meeting 2010 will be held at Victoriahallen, Stockholm International Fairs, Stockholm, on Thursday, 29 April at 3 p.m.
Shareholders who are registered in the share register print-out as of Friday 23 April 2010 and who give notice of their intention to attend the AGM no later than Friday, 23 April 2010, will be entitled to participate in the AGM.
Shareholders whose shares are registered in the name of a nominee must re-register their shares in their own name in order to be entitled to participate in the AGM. In order to re-register shares in time, shareholders should request temporary owner registration, which is referred to as voting right registration, well in advance of 23 April.
Shareholders must provide notice of their intention to participate in the Annual General Meeting by post, fax, telephone or via H&M's website to:
H & M Hennes & Mauritz AB Head Offi ce/Carola Echarti-Ardéhn 106 38 Stockholm Sweden Telephone: +46 (0)8 796 55 00 Fax: +46 (0)8 796 55 44 www.hm.com/arsstamma
Shareholders must provide their name, civil identity number and telephone number (daytime) when providing notice of their intention to participate.
The Board of Directors and the Managing Director have decided to propose to the Annual General Meeting a dividend for 2009 of SEK 16.00 per share. The Board of Directors has proposed 4 May 2010 as the record day. With this record day, Euroclear Sweden AB (formerly VPC AB) is expected to pay the dividend on 7 May 2010. To be guaranteed dividend payment, the H&M shares must have been purchased no later than 29 April 2010.
H & M Hennes & Mauritz AB will provide the following information:
| 8 April 2010 | Three month report |
|---|---|
| 29 April 2010 | Annual General Meeting 2010 at 3 p.m. at |
| Victoriahallen, Stockholm International | |
| Fairs, Stockholm | |
| 24 June 2010 | Half-year report |
| 29 September 2010 | Nine month report |
| 27 January 2011 | Full-year report |
As previously, we plan to publish sales fi gures for each month on the 15th of the subsequent month. If the 15th falls on a weekend, the sales fi gures will be published on the following weekday. However, H&M plans to publish the sales fi gures for February, May, August and December in each of the subsequent Interim reports.
This information is available at www.hm.com
H & M Hennes & Mauritz AB Mäster Samuelsgatan 46A 106 38 Stockholm Sweden Tel: +46 (0)8 796 55 00
For information about H&M and addresses of the country offi ces, please see www.hm.com
CEO Karl-Johan Persson FINANCE Jyrki Tervonen ACCOUNTS Anders Jonasson SALES Jonas Guldstrand BUYING Madeleine Persson DESIGN Ann-Sofi e Johansson PRODUCTION Karl Gunnar Fagerlin CORPORATE SOCIAL RESPONSIBILITY Ingrid Schullström EXPANSION Stefan Larsson BUSINESS DEVELOPMENT Björn Magnusson BRAND AND NEW BUSINESS Jörgen Andersson MARKETING Anna Tillberg Pantzar COMMUNICATIONS Kristina Stenvinkel INVESTOR RELATIONS Nils Vinge HUMAN RESOURCES Sanna Lindberg IT Kjell-Olof Nilsson LOGISTICS Danny Feltmann SECURITY Angelika Giese
The H&M Annual Report 2009 comes in two parts: Part 1: H&M in words and pictures 2009, and Part 2: H&M in fi gures 2009 including the Annual Report and Consolidated Accounts.
H&M sends out the printed version of Parts 1 and 2 to shareholders who have specifi cally expressed an interest in receiving the printed version. The Annual Report is also available to read and download at www.hm.com
PHOTOGRAPHY Camilla Åkrans MODEL Natasha Poly GARMENT Dress, H&M Garden Collection
www.hm.com/annualreport
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