Annual Report • Jan 30, 2014
Annual Report
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1 December 2012 – 30 November 2013
Comments by CEO Karl-Johan Persson follow on the next page.
Comments by CEO Karl-Johan Persson
"2013 ended strongly with well-received autumn collections, which increased our sales in the fourth quarter by 13 percent in local currencies. Profits after financial items increased by 11 percent to SEK 7.3 billion. This is a good result considering the substantial long-term investments that we are making in areas such as IT, online, new brands and broadening our product range.
Examples of these investments are our new fashion brand, & Other Stories, which has received a fantastic response as well as our extended H&M Sport range that was launched this January. The sports collections were designed together with Swedish Olympic athletes, with a focus on function, fit, design and comfort.
Another area where we are continuing to invest is online sales, which are becoming increasingly important. Our online sales continue to develop very well and hm.com, which is one of the world's most visited fashion websites, allows us to reach even more customers. In August we launched our online store in the US, with a very good response from customers. We are continuing our online expansion by opening more new online markets in 2014; France during spring/summer 2014 followed by an additional three large new online markets that are planned to open later in the year.
We continue to work intensively on sustainability in many different areas. H&M Conscious is the name given to our work towards a more sustainable future within fashion. Our vision is that H&M's entire operations should be managed in a way that is economically, socially and environmentally sustainable. We are therefore working daily to offer our customers increased sustainability in all our collections.
2013 was a year when we opened many new stores – on average, we opened more than one store each day. Today we have more than 3,100 stores in 53 countries and just over 116,000 employees. We are continuing to create more new jobs and we welcomed more than 12,000 new colleagues net during the year. Our strong expansion will continue in 2014, we plan to open around 375 new stores net and Australia and the Philippines will become new H&M countries. In addition to these countries, a couple of other new H&M markets are planned to open at the end of 2014.
The financial year 2014 has got off to a good start, with strong sales development in December and January. Although there are still macro-economic challenges in several of our markets, we are optimistic about 2014 which will be an exciting year with new countries and new opportunities. We have a strong belief in our offering and are convinced that we will strengthen our market position even further during the year."
| FULL-YEAR | FULL-YEAR | Q4 | Q4 | |
|---|---|---|---|---|
| 2013 | 2012 | 2013 | 2012 | |
| (SEK m) | ||||
| Net sales | 128,562 | 120,799 | 36,495 | 32,502 |
| Gross profit | 76,033 | 71,871 | 22,189 | 20,017 |
| gross margin, % | 59.1 | 59.5 | 60.8 | 61.6 |
| Operating profit | 22,168 | 21,754 | 7,260 | 6,533 |
| operating margin, % | 17.2 | 18.0 | 19.9 | 20.1 |
| Net financial items | 358 | 531 | 77 | 103 |
| Profit after financial items | 22,526 | 22,285 | 7,337 | 6,636 |
| Tax | -5,374 | -5,418 | -1,729 | -1,349 |
| Profit for the period | 17,152 | 16,867 | 5,608 | 5,287 |
| Earnings per share, SEK | 10.36 | 10.19 | 3.39 | 3.19 |
Sales and store openings
Sales including VAT increased by 9 percent, in local currencies in the financial year. Sales in comparable units were unchanged. Converted into SEK, sales increased by 6 percent to SEK 150,090 m (140,948). Sales excluding VAT increased to SEK 128,562 m (120,799), an increase of 6 percent.
In the fourth quarter, sales including VAT increased by 13 percent in local currencies. Sales in comparable units increased by 3 percent. Converted into SEK, sales including VAT increased by 12 percent and amounted to SEK 42,610 m (37,930). Sales excluding VAT increased to SEK 36,495 m (32,502).
The Group opened 399 (339) stores and closed 43 (35) stores during the financial year, i.e. a net increase of 356 (304) new stores. In the fourth quarter, 184 (158) stores opened and 16 (11) stores closed. The total number of stores in the Group as per 30 November 2013 thus amounted to 3,132 (2,776) of which 2,936 were H&M stores, 85 COS stores, 79 Monki stores, 21 Weekday stores, 8 & Other Stories stores and 3 Cheap Monday stores. 110 of the Group's stores were franchise stores.
Gross profit for the Group for the financial year amounted to SEK 76,033 m (71,871), an increase of 6 percent. This corresponds to a gross margin of 59.1 percent (59.5).
The operating profit amounted to SEK 22,168 m (21,754). This corresponds to an operating margin of 17.2 percent (18.0).
Operating profit for the financial year has been charged with depreciation amounting to SEK 4,191 m (3,705).
Consolidated net interest income was SEK 358 m (531).
Profit after financial items amounted to SEK 22,526 m (22,285).
The Group's profit for the financial year after a tax rate of 23.9 percent (24.3) was SEK 17,152 m (16,867), which represents earnings per share of SEK 10.36 (10.19), an increase of 2 percent.
Return on shareholders' equity was 38.5 percent (38.4) and return on capital employed was 50.2 percent (50.3).
The year ended with a strong sales development. Even if several markets were characterised by the prevailing challenging macro-economic situation and multiple price activities and markdowns in many markets, H&M continued to grow with continued high profitability and increasing market share.
The Group's online sales, which developed well during the year, are a very important complement to the stores. A completely mobile-adapted H&M shop online was launched at the beginning of the year and H&M's online sales were launched in the US in August. During the year, preparations have been made for a global roll-out of more onlinemarkets.
Many stores opened during 2013 – in total, a net addition of 356 new stores. At the end of the financial year the total number of stores amounted to 3,132 stores. Five new countries were added: Chile, Estonia, Lithuania and Serbia and via franchise, Indonesia. The store in Santiago de Chile, which opened in March, was the first H&M store in South America as well as the first H&M store south of the equator.
The long-term investments continued during the year in order to build an even stronger H&M and secure future expansion. One example of this is the new fashion brand & Other Stories that has been amazingly well-received since its launch in March. Building up a new brand takes time and involves major investments and costs, both initially and during roll-out.
COS is a successful example of a similar investment which, since its launch in 2007, has developed into an internationally well-established fashion brand. COS performed very well in 2013 and opened 21 new stores, corresponding to a store growth of more than 30 percent.
Examples of other long-term investments include the investments in IT and online and in the broadening of H&M's product range. Although this has meant increased costs for the Group, cost control remains good. Costs in comparable stores decreased compared to the previous year.
Profit for the year after financial items was affected by the major long-term investments mentioned above and by increased price markdowns in relation to sales compared to the previous year. In addition, compared to the previous year, the result was affected by negative currency translation effects of around SEK 600 m. Currency translation effects arise when converting local currencies into SEK, H&M's reporting currency.
Results for the fourth quarter
Gross profit for the Group for the fourth quarter increased by 11 percent and amounted to SEK 22,189 m (20,017). This corresponds to a gross margin of 60.8 percent (61.6).
Operating profit for the fourth quarter amounted to SEK 7,260 m (6,533). This corresponds to an operating margin of 19.9 percent (20.1).
Profit after financial items amounted to SEK 7,337 m (6,636).
Profit after tax was SEK 5,608 m (5,287), corresponding to SEK 3.39 (3.19) per share.
Comments on the fourth quarter
Strong sales in the fourth quarter resulted in further increased market share for the H&M Group. Sales increased by 13 percent in local currencies and by 3 percent in comparable units. Sales developed particularly well in Asia and Southern Europe. Online sales performed strongly in the fourth quarter.
Gross profit increased by 11 percent and amounted to SEK 22,189 m (20,017) corresponding to a gross margin of 60.8 percent (61.6). H&M's purchasing costs and gross margin are a result of many different factors, including raw material prices, cost inflation, capacity at suppliers, purchasing currencies and transportation costs. Overall, the market situation for these external factors is considered to have been largely neutral during the purchasing period for the fourth quarter compared to the corresponding purchasing period the previous year. The gross margin is affected by how well H&M handles these external factors and also by the decisions that H&M makes in line with its strategy to always have the best customer offering in each individual market – based on the combination of fashion, quality, price and sustainability.
The difference in the gross margin year-on-year is mainly due to currency exchange rate effects arising in connection with payments for the Group's flow of goods and to yearend effects. Markdowns in relation to sales increased by approximately 0.2 percentage points compared to the fourth quarter 2012.
Selling and administrative expenses in the quarter amounted to 14,929 (13,484), an increase of 11 percent. In local currencies the increase was also 11 percent. The cost increase compared to the fourth quarter 2012 is due to the expansion and to the longterm investments in for example IT, online sales and & Other Stories. These investments aim to further strengthen H&M's market position in the long term and to secure future expansion. Cost control in the Group remains good: costs in comparable stores decreased compared to the previous year, both in absolute terms and as a proportion of sales.
Profit after financial items increased by 11 percent and amounted to SEK 7,337 m (6,636). A contribution to H&M Incentive Program (HIP) reduced profit by SEK 31 m. As decided at the Annual General Meeting 2013, the contribution is based on 10 percent of the increase in the company's profit after tax, before any contribution to HIP, between two successive financial years.
The stock-in-trade increased by 10 percent compared to the same time the previous year and amounted to SEK 16,695 m (15,213). In local currencies the increase was also 10 percent. The increase is mainly due to the expansion. The stock-in-trade amounted to 13.0 percent (12.6) of sales excluding VAT and 25.4 percent (25.3) of total assets.
The composition of the stock-in-trade as of 30 November 2013 is deemed to be good even if the level is somewhat higher than planned which means that markdowns in the first quarter 2014 could end up at the same level in relation to sales as in the first quarter 2013.
Financial position and cash flow
Consolidated total assets as per 30 November 2013 amounted to SEK 65,676 m (60,173).
The current operations generated a positive cash flow of SEK 23,840 m (18,900). Cash flow was among other things affected by dividends of -15,723 (-15,723), investments in fixed assets of SEK -8,027 m (-6,827) and by changes in short-term investments with a duration of four to twelve months of SEK -311 m (3,963). The Group generated a cash flow of SEK -252 m (276) for the financial year. Liquid funds and short-term investments amounted to SEK 17,224 m (17,143).
The equity/assets ratio was 68.9 percent (72.8) and the share of risk-bearing capital was 73.0 percent (76.1).
Shareholders' equity apportioned on the outstanding 1,655,072,000 (1,655,072,000) shares as per 30 November 2013 was SEK 27.34 (26.49).
Expansion
H&M remains positive as regards future expansion and the Group's business opportunities.
H&M's growth target remains intact. The growth target is to increase the number of stores by 10-15 percent per year with continued high profitability, while at the same time increasing sales in comparable units.
For full-year 2014 a net addition of around 375 new stores is planned. Most new stores in 2014 are planned to open in China and the US. There are also still great opportunities for expansion in markets such as Russia, Germany, Italy and Poland.
Australia and the Philippines will become new H&M countries in 2014. In Melbourne, Australia the first H&M store will open in the first half year of 2014 and in the Philippines H&M will open its first store in Manila in autumn 2014. In addition to this, a couple of other new H&M markets are planned to open at the end of 2014. H&M will also open in South Africa in 2015.
The Group is continuing to work on the global roll-out of new H&M online markets. France during spring/summer 2014 followed by an additional three large new online markets that are planned to open later in the year.
Expansion continues for the Group's other brands COS, Monki, Weekday, Cheap Monday and & Other Stories. H&M Home will expand to approximately 15 new countries in 2014.
COS will open its first US store during 2014 in Soho, New York, and will also open online in the US in 2014. In addition, South Korea, Australia and Switzerland will become new markets for COS in 2014 with stores in Seoul, Melbourne and Geneva.
& Other Stories will open further stores in 2014 in both existing and new markets, including Belgium and the Netherlands, which will be new markets for & Other Stories stores. Austria and Ireland will also become new online markets for & Other Stories.
In January 2014 H&M launched H&M Sport - an updated and expanded sports concept for women, men and children. The range is significantly broader than previously and consists of sportswear and accessories in specially developed functional materials suited to various kinds of sporting activities. The concept is initially being launched in H&M's existing online markets as well as in selected H&M stores in 18 countries.
Tax
The Swedish corporate tax rate was reduced from 26.3 percent to 22 percent as of 1 January 2013. The H&M Group's final tax rate for the financial year 2012/2013 was 23.9 percent (24.3). The Group's tax rate depends on the results of its various companies and the corporate tax rates in each country. The H&M Group's tax rate is expected to be 23 – 24 percent for the financial year of 2013/2014.
The average number of employees in the Group, converted into full-time positions, was 81, 099 (72,276), of which 6,868 (6,220) are employed in Sweden.
The parent company's external sales amounted to SEK 35 m (30) in the financial year. Profit after financial items amounted to SEK 17,015 m (15,888). Investments in fixed assets amounted to SEK 161 m (125).
As previously communicated, sales including VAT increased by 10 percent in local currencies in December 2013 compared to the same month the previous year. Calendar adjusted sales increased just above 12 percent.
Sales in January 2014 are expected to increase by 15 percent in local currencies compared to the same month the previous year.
Due to the fact that the level of stock-in-trade as of 30 November 2013 is deemed to be somewhat higher than planned, markdowns in the first quarter 2014 could end up at the same level in relation to sales as in the first quarter 2013.
In 2014 the H&M Group will continue to publish interim reports in accordance with IAS 34, as previously, including for the first and third quarters.
H&M's financial goal is to enable the company to continue enjoying good growth and to be prepared to exploit business opportunities. It is essential that the expansion, as in the past, proceeds with continued high degree of financial strength and continued freedom of action. Based on this policy, the Board of Directors has decided that the total dividend should equal about half of the profit after tax. In addition, the Board may propose that any surplus liquidity is also distributed.
The Board of Directors has decided to propose a dividend of SEK 9.50 per share (9.50) to the 2014 Annual General Meeting corresponding to 92 percent (93) of the profit after tax.
The Board of Directors is of the opinion that the proposed distribution of earnings is justifiable taking into consideration the financial position and continued 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.
The Annual General Meeting 2014 will be held on Tuesday 29 April, at 3 p.m. in Victoriahallen, at the Stockholm International Fairs.
The Annual Report and the Corporate Governance Report are expected to be published on 2 April 2014 on hm.com and will be sent out by post to shareholders that have so requested and will also be available at the company's head office.
The Group applies the International Financial Reporting Standards (IFRS) as adopted by the EU. This report has been prepared according to IAS 34 Interim Financial Reporting as well as the Swedish Annual Accounts Act.
The accounting principles and calculation methods applied in this report are unchanged from those used in the preparation of the Annual Report and Consolidated Financial Statements for 2011/2012 which is described in Note 1 – Accounting principles.
The parent company applies the Swedish Annual Accounts Act and the Swedish Financial Reporting Board's recommendation RFR 2 Accounting for Legal Entities, which essentially involves applying IFRS. In accordance with RFR 2 the parent company does not apply IAS 39 to the measurement of financial instruments; nor does it capitalise development expenditure.
Risks and uncertainties
A number of factors may affect H&M's results and business. Most of these can be dealt with through internal routines, while certain others are affected more by external influences. There are risks and uncertainties related to fashion, weather situations, negative macro-economic changes, changes in consumer behaviour, climate changes, trade interventions, external factors in production countries and foreign currency, but also in connection with expansion into new markets, the launch of new concepts and how the brand is managed.
For a more detailed description of risks and uncertainties, refer to the Administration Report and to Note 2 in the Annual Report and Consolidated Accounts for 2012.
Key-ratio definitions
Return on equity: Profit for the year in relation to average shareholders' equity.
Return on capital employed: Profit after financial items plus interest expense in relation to average shareholders' equity plus average interest-bearing liabilities.
Share of risk-bearing capital: Shareholders' equity plus deferred tax liability in relation to the balance sheet total.
Equity/assets ratio: Shareholders' equity in relation to the balance sheet total.
Equity per share: Shareholders' equity divided by number of shares.
P/E ratio: Price per share divided by earnings per share.
Comparable units: Comparable units comprise the stores and the internet and catalogue sales countries that have been in operation for at least one financial year. H&M's financial year is from 1 December to 30 November.
All figures within parenthesis refer to the corresponding period or point of time the previous year.
| 27 March 2014 | Three-month report, 1 December 2013 – 28 February 2014 |
|---|---|
| 29 April 2014 | Annual General Meeting 2014, Victoriahallen, Stockholm International Fairs at 3 p.m. |
| 18 June 2014 | Half-year report, 1 December 2013 – 31 May 2014 |
Stockholm, 29 January 2014 Board of Directors
The information in this Full-year Report is that which H & M Hennes & Mauritz AB (publ) is required to disclose under Sweden's Securities Market Act. It will be released for publication at 8.00 (CET) on 30 January 2014. This Full-year Report, and other information about H&M, is available at www.hm.com.
Nils Vinge, IR +46-8-796 52 50
Karl-Johan Persson, CEO +46-8-796 55 00 (switchboard) Jyrki Tervonen, CFO +46-8-796 55 00 (switchboard)
H & M Hennes & Mauritz AB (publ)
SE-106 38 Stockholm
Phone: +46-8-796 55 00, Fax: +46-8-24 80 78, E-mail: [email protected] Registered office: Stockholm, Reg. No. 556042-7220
H & M Hennes & Mauritz AB (publ) was founded in Sweden in 1947 and is quoted on NASDAQ OMX Stockholm. The company's business concept is to offer fashion and quality at the best price. In addition to H&M, the group includes the brands COS, Monki, Weekday, Cheap Monday, & Other Stories as well as H&M Home. The H&M Group has more than 3,100 stores in 53 markets including franchise markets. In 2013, sales including VAT were SEK 150,090 million and the number of employees was more than 116,000. For further information, visit www.hm.com.
Fourth quarter, 1 September - 30 November
| 2013 | 2012 | Q4 2013 | Q4 2012 | |
|---|---|---|---|---|
| Sales including VAT | 150,090 | 140,948 | 42,610 | 37,930 |
| Sales excluding VAT | 128,562 | 120,799 | 36,495 | 32,502 |
| Cost of goods sold | -52,529 | -48,928 | -14,306 | -12,485 |
| GROSS PROFIT | 76,033 | 71,871 | 22,189 | 20,017 |
| Gross margin, % | 59.1 | 59.5 | 60.8 | 61.6 |
| Selling expenses | -49,878 | -46,608 | -13,794 | -12,511 |
| Administrative expenses | -3,987 | -3,509 | -1,135 | -973 |
| OPERATING PROFIT | 22,168 | 21,754 | 7,260 | 6,533 |
| Operating margin, % | 17.2 | 18.0 | 19.9 | 20.1 |
| Interest income | 367 | 536 | 84 | 106 |
| Interest expense | -9 | -5 | -7 | -3 |
| PROFIT AFTER FINANCIAL ITEMS | 22,526 | 22,285 | 7,337 | 6,636 |
| Tax | -5,374 | -5,418 | -1,729 | -1,349 |
| PROFIT FOR THE PERIOD | 17,152 | 16,867 | 5,608 | 5,287 |
All profit is attributable to the shareholders of the parent company H & M Hennes & Mauritz AB.
| Earnings per share, SEK* | 10.36 | 10.19 | 3.39 | 3.19 |
|---|---|---|---|---|
| Number of shares, thousands* | 1,655,072 | 1,655,072 | 1,655,072 | 1,655,072 |
| Depreciation, total | 4,191 | 3,705 | 1,079 | 944 |
| of which cost of goods sold | 470 | 415 | 121 | 105 |
| of which selling expenses | 3,463 | 3,065 | 890 | 781 |
| of which administrative expenses | 258 | 225 | 68 | 58 |
* Before and after dilution.
Full Year, 1 December - 30 November
Fourth quarter, 1 September - 30 November
| 2013 | 2012 | Q4 2013 | Q4 2012 | |
|---|---|---|---|---|
| PROFIT FOR THE PERIOD | 17,152 | 16,867 | 5,608 | 5,287 |
| Other comprehensive income Items that have been recognised or may be recognised in net profit for the period |
||||
| Translation differences | 30 | -1,212 | 426 | 579 |
| Change in hedging reserves | -61 | -272 | 16 | -414 |
| Tax attributable to other comprehensive income | 15 | 71 | - 5 |
108 |
| OTHER COMPREHENSIVE INCOME | -16 | -1,413 | 437 | 273 |
| TOTAL COMPREHENSIVE INCOME FOR THE PERIOD | 17,136 | 15,454 | 6,045 | 5,560 |
All comprehensive profit is attributable to the shareholders of the parent company H & M Hennes & Mauritz AB.
30 November
| ASSETS | 2013 | 2012 |
|---|---|---|
| FIXED ASSETS | ||
| Intangible fixed assets | ||
| Brands | 208 | 255 |
| Customer relations | 58 | 71 |
| Leasehold rights | 591 | 537 |
| Capitalised expenditures | 1,355 | 631 |
| Goodwill | 64 | 64 |
| 2,276 | 1,558 | |
| Tangible fixed assets | ||
| Buildings and land | 814 | 805 |
| Equipment, tools, fixture and fittings | 21,372 | 18,326 |
| 22,186 | 19,131 | |
| Long-term receivables | 659 | 628 |
| Deferred tax receivables | 1,367 | 1,624 |
| TOTAL FIXED ASSETS | 26,488 | 22,941 |
| CURRENT ASSETS | ||
| Stock-in-trade | 16,695 | 15,213 |
| Current receivables | ||
| Accounts receivables | 3,107 | 2,207 |
| Tax receivables | - | 477 |
| Other receivables | 907 | 1,056 |
| Prepaid expenses | 1,255 | 1,136 |
| 5,269 | 4,876 | |
| Short-term investments | 3,306 | 2,995 |
| Liquid funds | 13,918 | 14,148 |
| TOTAL CURRENT ASSETS | 39,188 | 37,232 |
| TOTAL ASSETS | 65,676 | 60,173 |
30 November
| EQUITY AND LIABILITIES | 2013 | 2012 |
|---|---|---|
| EQUITY | ||
| Share capital | 207 | 207 |
| Reserves | -1,916 | -1,900 |
| Retained earnings | 29,805 | 28,661 |
| Profit for the year | 17,152 | 16,867 |
| TOTAL EQUITY | 45,248 | 43,835 |
| Long-term liabilities* | ||
| Provisions for pensions | 309 | 377 |
| Deferred tax liabilities | 2,722 | 1,951 |
| 3,031 | 2,328 | |
| Current liabilities** | ||
| Accounts payable | 4,870 | 4,234 |
| Tax liabilities | 797 | - |
| Other liabilities | 3,360 | 2,765 |
| Accrued expenses and prepaid income | 8,370 | 7,011 |
| 17,397 | 14,010 | |
| TOTAL LIABILITIES | 20,428 | 16,338 |
| TOTAL EQUITY AND LIABILITIES | 65,676 | 60,173 |
| Pledged assets and contingent liabilities | - | - |
* Only pension liabilities are interest-bearing.
** No current liabilities are interest-bearing.
Since there are no minority interests, all shareholders' equity is attributable to the shareholders of the parent company H & M Hennes & Mauritz AB.
| SHARE | TRANSLATION | HEDGINGS | RETAINED | TOTAL | |
|---|---|---|---|---|---|
| CAPITAL | EFFECTS | RESERVES | EARNINGS | SHAREHOLDERS' | |
| EQUITY | |||||
| Shareholders' equity, 1 December 2012 | 207 | -1,860 | -40 | 45,528 | 43,835 |
| Profit for the year | - | - | - | 17,152 | 17,152 |
| Other comprehensive income | |||||
| Translation differences | - | 30 | - | - | 30 |
| Change in hedging reserves | |||||
| Reported in other comprehensive income | - | - | -153 | - | -153 |
| Transfer to income statement | - | - | 92 | - | 92 |
| Tax attributable to hedging reserves | - | - | 15 | - | 15 |
| Other comprehensive income | - | 30 | -46 | - | -16 |
| Total comprehensive income | - | 30 | -46 | 17,152 | 17,136 |
| Dividend | - | - | - | -15,723 | -15,723 |
| Shareholders' equity, 30 November 2013 | 207 | -1,830 | -86 | 46,957 | 45,248 |
| SHARE | TRANSLATION | HEDGINGS | RETAINED | TOTAL | |
|---|---|---|---|---|---|
| CAPITAL | EFFECTS | RESERVES | EARNINGS | SHAREHOLDERS' | |
| EQUITY | |||||
| Shareholders' equity, 1 December 2011 | 207 | -648 | 161 | 44,384 | 44,104 |
| Profit for the year | - | - | - | 16,867 | 16,867 |
| Other comprehensive income | |||||
| Translation differences | - | -1,212 | - | - | -1,212 |
| Change in hedging reserves | |||||
| Reported in other comprehensive income | - | - | 128 | - | 128 |
| Transfer to income statement | - | - | -400 | - | -400 |
| Tax attributable to hedging reserves | - | - | 71 | - | 71 |
| Other comprehensive income | - | -1,212 | -201 | - | -1,413 |
| Total comprehensive income | - | -1,212 | -201 | 16,867 | 15,454 |
| Dividend | - | - | - | -15,723 | -15,723 |
| Shareholders' equity, 30 November 2012 | 207 | -1,860 | -40 | 45,528 | 43,835 |
* Adjustment of pension obligations related to prior years.
1 December - 30 November
| 2013 | 2012 | |
|---|---|---|
| Current operations | ||
| Profit after financial items* | 22,526 | 22,285 |
| Provisions for pensions | -68 | 10 |
| Depreciation | 4,191 | 3,705 |
| Tax paid | -3,059 | -7,021 |
| Cash flow from current operations before changes | 23,590 | 18,979 |
| in working capital | ||
| Cash flow from changes in working capital | ||
| Current receivables | -839 | -8 |
| Stock-in-trade | -1,439 | -1,607 |
| Current liabilities | 2,528 | 1,536 |
| CASH FLOW FROM CURRENT OPERATIONS | 23,840 | 18,900 |
| Investment activities | ||
| Investment in leasehold rights | -179 | -125 |
| Investments in other immaterial assets | -738 | -631 |
| Investment in buildings and land | -23 | -63 |
| Investment in fixed assets | -7,087 | -6,008 |
| Change in short-term investments, 4 - 12 months | -311 | 3,963 |
| Other investments | -31 | -37 |
| CASH FLOW FROM INVESTMENT ACTIVITIES | -8,369 | -2,901 |
| Financing activities | ||
| Dividend | -15,723 | -15,723 |
| CASH FLOW FROM FINANCING ACTIVITIES | -15,723 | -15,723 |
| CASH FLOW FOR THE YEAR | -252 | 276 |
| Liquid funds at beginning of the financial year | 14,148 | 14,319 |
| Cash flow for the year | -252 | 276 |
| Exchange rate effect | 22 | -447 |
| Liquid funds at end of the financial year** | 13,918 | 14,148 |
* Interest paid for the Group amounts to SEK 9 m (5).
Received interest for the Group amounts to SEK 367 m (536).
** Liquid funds and short-term investments at the end of the financial year amounted to SEK 17,224 m (17,143).
Full-year 1 December - 30 November
| SEK m | SEK m | Change in % | No. of stores | New | Closed | ||
|---|---|---|---|---|---|---|---|
| COUNTRY | 2013 | 2012 | SEK | Local currency |
30 Nov 2013 | stores | stores |
| Sweden | 8,257 | 8,225 | 0 | 0 | 177 | 7 | 7 |
| Norway | 5,535 | 5,615 | -1 | 3 | 114 | 4 | 1 |
| Denmark | 4,612 | 4,297 | 7 | 9 | 97 | 4 | 1 |
| United Kingdom | 10,256 | 10,413 | -2 | 3 | 245 | 21 | 2 |
| Switzerland | 5,516 | 5,821 | -5 | -3 | 87 | 5 | |
| Germany | 31,140 | 30,303 | 3 | 4 | 418 | 19 | 7 |
| Netherlands | 6,750 | 6,688 | 1 | 2 | 130 | 7 | 1 |
| Belgium | 3,445 | 3,308 | 4 | 5 | 73 | 4 | 1 |
| Austria | 4,821 | 4,782 | 1 | 2 | 72 | 5 | 1 |
| Luxembourg | 386 | 374 | 3 | 4 | 10 | 1 | 1 |
| Finland | 2,529 | 2,429 | 4 | 5 | 58 | 6 | 1 |
| France | 10,636 | 9,976 | 7 | 8 | 197 | 18 | 3 |
| USA | 13,675 | 12,550 | 9 | 13 | 305 | 44 | 8 |
| Spain | 6,011 | 5,807 | 4 | 5 | 156 | 13 | 3 |
| Poland | 3,193 | 2,947 | 8 | 9 | 122 | 19 | |
| Czech Republic | 834 | 769 | 8 | 12 | 38 | 7 | |
| Portugal | 918 | 862 | 6 | 8 | 27 | 4 | |
| Italy | 5,490 | 4,861 | 13 | 14 | 116 | 13 | 1 |
| Canada | 3,024 | 3,125 | -3 | 3 | 66 | 5 | |
| Slovenia | 468 | 485 | -4 | -2 | 12 | ||
| Ireland | 616 | 581 | 6 | 7 | 19 | 3 | |
| Hungary | 792 | 622 | 27 | 31 | 33 | 7 | |
| Slovakia | 373 | 339 | 10 | 11 | 13 | ||
| Greece | 981 | 841 | 17 | 18 | 27 | 3 | 1 |
| China | 6,655 | 5,411 | 23 | 25 | 205 | 74 | 3 |
| Japan | 2,945 | 2,504 | 18 | 46 | 39 | 18 | 1 |
| Russia | 2,566 | 2,122 | 21 | 28 | 51 | 14 | |
| South Korea | 810 | 594 | 36 | 36 | 16 | 5 | |
| Turkey | 721 | 443 | 63 | 76 | 20 | 9 | |
| Romania | 893 | 635 | 41 | 42 | 28 | 9 | |
| Croatia | 704 | 608 | 16 | 18 | 13 | 2 | |
| Singapore | 613 | 409 | 50 | 54 | 6 | 4 | |
| Bulgaria | 264 | 121 | 118 | 122 | 11 | 7 | |
| Latvia | 130 | 36 | 261 | 264 | 3 | 1 | |
| Malaysia | 379 | 84 | 351 | 372 | 7 | 5 | |
| Mexico | 325 | 47 | 591 | 599 | 3 | 2 | |
| Chile | 276 | 1 | 1 | ||||
| Lithuania | 44 | 2 | 2 | ||||
| Serbia | 70 | 2 | 2 | ||||
| Estonia | 43 | 3 | 3 | ||||
| Franchise | 2,394 | 1,914 | 25 | 24 | 110 | 22 | |
| Total | 150,090 | 140,948 | 6 | 9 | 3,132 | 399 | 43 |
| SEK m | SEK m | Change in % | No. of stores | New | Closed | ||
|---|---|---|---|---|---|---|---|
| COUNTRY | Q4-2013 | Q4-2012 | SEK | Local currency |
30 Nov 2013 | stores | stores |
| Sweden | 2,184 | 2,067 | 6 | 6 | 177 | 3 | 6 |
| Norway | 1,405 | 1,452 | -3 | 3 | 114 | 2 | |
| Denmark | 1,272 | 1,145 | 11 | 9 | 97 | 2 | 1 |
| United Kingdom | 3,044 | 2,805 | 9 | 11 | 245 | 12 | 2 |
| Switzerland | 1,524 | 1,518 | 0 | 0 | 87 | 2 | |
| Germany | 8,836 | 8,012 | 10 | 7 | 418 | 8 | 2 |
| Netherlands | 1,940 | 1,799 | 8 | 6 | 130 | 1 | |
| Belgium | 941 | 865 | 9 | 7 | 73 | 2 | 1 |
| Austria | 1,356 | 1,275 | 6 | 4 | 72 | 3 | 1 |
| Luxembourg | 107 | 97 | 10 | 8 | 10 | ||
| Finland | 644 | 600 | 7 | 5 | 58 | 4 | 1 |
| France | 3,093 | 2,727 | 13 | 11 | 197 | 7 | |
| USA | 3,920 | 3,346 | 17 | 20 | 305 | 28 | 1 |
| Spain | 1,667 | 1,450 | 15 | 13 | 156 | 4 | 1 |
| Poland | 895 | 800 | 12 | 11 | 122 | 8 | |
| Czech Republic | 237 | 217 | 9 | 12 | 38 | 2 | |
| Portugal | 255 | 207 | 23 | 21 | 27 | 1 | |
| Italy | 1,723 | 1,385 | 24 | 23 | 116 | 6 | |
| Canada | 824 | 861 | -4 | 3 | 66 | 3 | |
| Slovenia | 134 | 133 | 1 | -1 | 12 | ||
| Ireland | 182 | 156 | 17 | 14 | 19 | 2 | |
| Hungary | 249 | 184 | 35 | 39 | 33 | 4 | |
| Slovakia | 105 | 98 | 7 | 5 | 13 | ||
| Greece | 286 | 210 | 36 | 34 | 27 | ||
| China | 1,957 | 1,608 | 22 | 22 | 205 | 35 | |
| Japan | 866 | 812 | 7 | 34 | 39 | 8 | |
| Russia | 649 | 585 | 11 | 19 | 51 | 8 | |
| South Korea | 243 | 192 | 27 | 22 | 16 | ||
| Turkey | 248 | 122 | 103 | 126 | 20 | 4 | |
| Romania | 273 | 195 | 40 | 37 | 28 | 3 | |
| Croatia | 207 | 193 | 7 | 7 | 13 | ||
| Singapore | 155 | 107 | 45 | 50 | 6 | 1 | |
| Bulgaria | 78 | 42 | 86 | 85 | 11 | 1 | |
| Latvia | 36 | 36 | 0 | 1 | 3 | 1 | |
| Malaysia | 112 | 84 | 33 | 42 | 7 | 3 | |
| Mexico | 101 | 47 | 115 | 121 | 3 | 2 | |
| Chile | 75 | 1 | |||||
| Lithuania | 37 | 2 | 1 | ||||
| Serbia | 65 | 2 | 1 | ||||
| Estonia | 43 | 3 | 3 | ||||
| Franchise | 642 | 498 | 29 | 28 | 110 | 9 | |
| Total | 42,610 | 37,930 | 12 | 13 | 3,132 | 184 | 16 |
| THE FINANCIAL YEAR | 2013 | 2012 | 2011 | 2010 | 2009 |
|---|---|---|---|---|---|
| Sales including VAT, SEK m | 150,090 | 140,948 | 128,810 | 126,966 | 118,697 |
| Sales excluding VAT, SEK m | 128,562 | 120,799 | 109,999 | 108,483 | 101,393 |
| Change from previous year, % | 6 | 10 | 1 | 7 | 15 |
| Change from previous year in local currencies, % | 9 | 11 | 8 | 15 | 4 |
| Operating profit, SEK m | 22,168 | 21,754 | 20,379 | 24,659 | 21,644 |
| Operating margin, % | 17.2 | 18.0 | 18.5 | 22.7 | 21.3 |
| Depreciation for the year, SEK m | 4,191 | 3,705 | 3,262 | 3,061 | 2,830 |
| Profit after financial items, SEK m | 22,526 | 22,285 | 20,942 | 25,008 | 22,103 |
| Profit after tax, SEK m | 17,152 | 16,867 | 15,821 | 18,681 | 16,384 |
| Liquid funds and short-term investments, SEK m | 17,224 | 17,143 | 21,277 | 24,858 | 22,025 |
| Stock-in-trade, SEK m | 16,695 | 15,213 | 13,819 | 11,487 | 10,240 |
| Equity, SEK m | 45,248 | 43,835 | 44,104 | 44,172 | 40,613 |
| Number of shares, thousands* | 1,655,072 | 1,655,072 | 1,655,072 | 1,655,072 | 1,655,072 |
| Earnings per share, SEK* | 10.36 | 10.19 | 9.56 | 11.29 | 9.90 |
| Shareholders' equity per share, SEK* | 27.34 | 26.49 | 26.65 | 26.69 | 24.54 |
| Cash flow from current operations per share, SEK* |
14.40 | 11.42 | 10.53 | 13.19 | 10.86 |
| Dividend per share, SEK | 9.50** | 9.50 | 9.50 | 9.50 | 8.00 |
| Return on shareholders' equity, % | 38.5 | 38.4 | 35.8 | 44.1 | 42.2 |
| Return on capital employed, % | 50.2 | 50.3 | 47.1 | 58.7 | 56.7 |
| Share of risk-bearing capital, % | 73.0 | 76.1 | 74.9 | 76.2 | 78.5 |
| Equity/assets ratio, % | 68.9 | 72.8 | 73.3 | 74.6 | 74.7 |
| Total number of stores | 3,132 | 2,776 | 2,472 | 2,206 | 1,988 |
| Average number of employees | 81,099 | 72,276 | 64,874 | 59,440 | 53,476 |
* Before and after dilution. The number of shares has been adjusted for all periods because of the tw o-for-one share split carried out by H&M in 2010.
** Proposed by the Board of Directors.
Definition on key figures see page 9.
| 2011 | 2012 | 2013 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Q 1 | Q 2 | Q 3 | Q 4 | Q 1 | Q 2 | Q 3 | Q 4 | Q 1 | Q 2 | Q 3 | Q 4 | |
| Sales including VAT, SEK m | 28,708 32,400 31,511 36,191 32,503 36,947 33,568 37,930 33,146 36,923 37,411 | 42,610 | ||||||||||
| Sales excluding VAT, SEK m | 24,503 27,632 26,912 30,952 27,832 31,658 28,806 32,502 28,392 31,635 32,040 | 36,495 | ||||||||||
| Change from previous year, % | - 1 |
2 | 0 | 4 | 14 | 15 | 7 | 5 | 2 | 0 | 11 | 12 |
| Operating profit, SEK m | 3,408 | 5,599 | 4,707 | 6,665 | 3,526 | 6,893 | 4,802 | 6,533 | 3,130 | 6,023 | 5,755 | 7,260 |
| Operating margin, % | 13.9 | 20.3 | 17.5 | 21.5 | 12.7 | 21.8 | 16.7 | 20.1 | 11.0 | 19.0 | 18.0 | 19.9 |
| Depreciation for the period, SEK m | 808 | 826 | 831 | 797 | 911 | 929 | 921 | 944 | 1,030 | 1,020 | 1,056 | 1,079 |
| Profit after financial items, SEK m | 3,538 | 5,752 | 4,850 | 6,802 | 3,701 | 7,053 | 4,895 | 6,636 | 3,234 | 6,125 | 5,830 | 7,337 |
| Profit after tax, SEK m | 2,618 | 4,257 | 3,589 | 5,357 | 2,739 | 5,219 | 3,622 | 5,287 | 2,458 | 4,655 | 4,431 | 5,608 |
| Liquid assets*, SEK m | 24,355 15,207 16,895 21,277 22,029 13,543 13,552 17,143 18,959 | 9,061 10,953 | 17,224 | |||||||||
| Stock-in-trade, SEK m | 10,822 10,414 13,310 13,819 12,397 11,299 13,501 15,213 13,825 12,667 15,329 | 16,695 | ||||||||||
| Equity, SEK m | 45,587 33,946 38,214 44,104 45,852 36,516 38,275 43,835 45,625 34,747 39,203 | 45,248 | ||||||||||
| Earnings per share, SEK** | 1.58 | 2.57 | 2.17 | 3.24 | 1.65 | 3.15 | 2.19 | 3.19 | 1.49 | 2.81 | 2.68 | 3.39 |
| Equity per share, SEK** | 27.54 | 20.51 | 23.09 | 26.65 | 27.70 | 22.06 | 23.13 | 26.49 | 27.57 | 20.99 | 23.69 | 27.34 |
| Cash flow from current |
||||||||||||
| operations per share, SEK** | 0.46 | 4.70 | 1.62 | 3.75 | 1.34 | 5.11 | 1.43 | 3.54 | 2.28 | 4.50 | 2.27 | 5.35 |
| Share of risk-bearing capital, % | 81.4 | 73.0 | 72.9 | 74.9 | 79.1 | 73.5 | 74.0 | 76.1 | 78.4 | 73.2 | 73.4 | 73.0 |
| Equity/assets ratio, % | 79.9 | 71.3 | 71.4 | 73.3 | 77.6 | 71.5 | 72.3 | 72.8 | 75.1 | 69.2 | 69.9 | 68.9 |
| Total number of stores | 2,212 | 2,297 | 2,325 | 2,472 | 2,491 | 2,575 | 2,629 | 2,776 | 2,818 | 2,908 | 2,964 | 3,132 |
| Rolling 12 months | ||||||||||||
| Earnings per share, SEK** | 10.61 | 10.03 | 9.64 | 9.56 | 9.63 | 10.21 | 10.23 | 10.19 | 10.02 | 9.68 | 10.17 | 10.36 |
| Return on shareholders' equity, % | 39.3 | 47.4 | 41.1 | 35.8 | 34.9 | 48.0 | 44.3 | 38.4 | 36.3 | 45.0 | 43.4 | 38.5 |
| Return on capital employed, % | 52.3 | 63.0 | 54.6 | 47.1 | 45.8 | 63.0 | 58.2 | 50.3 | 47.3 | 58.0 | 55.8 | 50.2 |
| Stock-in-trade in % of turnover | 10.0 | 9.6 | 12.2 | 12.6 | 10.9 | 9.6 | 11.3 | 12.6 | 11.4 | 10.4 | 12.3 | 13.0 |
* Liquid funds and short-term investments
** Before and after dilution.
Definitions on key figures see page 9.
1 December - 30 November
| Asia and Oceania | 2013 | 2012 |
|---|---|---|
| External net sales | 12,844 | 10,191 |
| Operating profit | 1,916 | 1,634 |
| Operating margin, % | 14.9 | 16.0 |
| Assets excluding tax receivables | 5,221 | 3,857 |
| Liabilities excluding tax liabilities | 626 | 495 |
| Investments | 1,163 | 918 |
| Depreciation | 348 | 242 |
| Europe | ||
| External net sales | 99,492 | 95,816 |
| Operating profit | 5,929 | 3,450 |
| Operating margin, % | 6.0 | 3.6 |
| Assets excluding tax receivables | 33,965 | 31,341 |
| Liabilities excluding tax liabilities | 8,404 | 7,370 |
| Investments | 4,034 | 3,776 |
| Depreciation | 2,828 | 2,603 |
| North and South America | ||
| External net sales | 16,226 | 14,792 |
| Operating profit | 407 | 325 |
| Operating margin, % | 2.5 | 2.2 |
| Assets excluding tax receivables | 7,006 | 5,292 |
| Liabilities excluding tax liabilities | 2,202 | 1,572 |
| Investments | 1,829 | 1,269 |
| Depreciation | 724 | 601 |
| Group Functions | ||
| Net sales to other segments | 60,448 | 69,047 |
| Operating profit | 13,916 | 16,345 |
| Operating margin, % | 23.0 | 23.7 |
| Assets excluding tax receivables | 18,117 | 17,582 |
| Liabilities excluding tax liabilities | 5,677 | 4,950 |
| Investments | 1,001 | 864 |
| Depreciation | 291 | 259 |
| Eliminations | ||
| Net sales to other segments | -60,448 | -69,047 |
| Total | ||
| External net sales | 128,562 | 120,799 |
| Operating profit | 22,168 | 21,754 |
| Operating margin, % | 17.2 | 18.0 |
| Assets excluding tax receivables | 64,309 | 58,072 |
| Liabilities excluding tax liabilities | 16,909 | 14,387 |
| Investments | 8,027 | 6,827 |
| Depreciation | 4,191 | 3,705 |
| In order to better reflect the company's current geographical spread, w | ith effect from 2013 reporting w | ill be divided into |
the follow ing three segments: Asia and Oceania, Europe and North & South America. The parent company and other subsidiaries w ith no external sales are reported in a separate Group-w ide segment.
Full year, 1 December - 30 November
Fourth quarter, 1 September - 30 November
| 2013 | 2012 | Q4 2013 | Q4 2012 | |
|---|---|---|---|---|
| External sales excluding VAT | 35 | 30 | 30 | 25 |
| Internal sales excluding VAT* | 7,845 | 7,271 | 2,212 | 1,976 |
| GROSS PROFIT | 7,880 | 7,301 | 2,242 | 2,001 |
| Selling expenses | -2,699 | -2,788 | -903 | -966 |
| Administrative expenses | -4,259 | -3,281 | -1,439 | -862 |
| OPERATING PROFIT | 922 | 1,232 | -100 | 173 |
| Dividend from subsidiaries | 16,039 | 14,518 | 15,014 | 12,858 |
| Interest income | 63 | 139 | 22 | 34 |
| Interest expense | -9 | -1 | -7 | -1 |
| PROFIT AFTER FINANCIAL ITEMS | 17,015 | 15,888 | 14,929 | 13,064 |
| Year-end appropriations | -1,020 | -328 | -1,020 | -328 |
| Tax | -50 | -255 | 229 | 51 |
| PROFIT FOR THE PERIOD | 15,945 | 15,305 | 14,138 | 12,787 |
* Includes royalty received from Group companies.
Full year, 1 December - 30 November
Fourth quarter, 1 September - 30 November
| 2013 | 2012 | Q4 2013 | Q4 2012 | |
|---|---|---|---|---|
| PROFIT FOR THE PERIOD | 15,945 | 15,305 | 14,138 | 12,787 |
| Other comprehensive income | - | - | - | - |
| TOTAL COMPREHENSIVE INCOME FOR THE PERIOD | 15,945 | 15,305 | 14,138 | 12,787 |
30 November
| ASSETS | 2013 | 2012 |
|---|---|---|
| FIXED ASSETS | ||
| Tangible fixed assets | ||
| Buildings and land | 56 | 47 |
| Equipment, tools, fixture and fittings | 446 | 412 |
| 502 | 459 | |
| Financial fixed assets | ||
| Shares and participation rights | 588 | 588 |
| Receivables from subsidiaries | 733 | 950 |
| Long-term receivables | 13 | 13 |
| Deferred tax receivables | 47 | 51 |
| 1,381 | 1,602 | |
| TOTAL FIXED ASSETS | 1,883 | 2,061 |
| CURRENT ASSETS | ||
| Current receivables | ||
| Receivables from subsidiaries | 12,107 | 12,412 |
| Tax receivables | - | 300 |
| Other receivables | 33 | 43 |
| Prepaid expenses | 23 | 25 |
| 12,163 | 12,780 | |
| Short-term investments | 3,304 | 2,993 |
| Liquid funds | 1,324 | 305 |
| TOTAL CURRENT ASSETS | 16,791 | 16,078 |
| TOTAL ASSETS | 18,674 | 18,139 |
30 November
| EQUITY AND LIABILITIES | ||
|---|---|---|
| 2013 | 2012 | |
| EQUITY | ||
| Restricted equity | ||
| Share capital | 207 | 207 |
| Restricted reserves | 88 | 88 |
| 295 | 295 | |
| Non-restricted equity | ||
| Retained earnings | 607 | 1,026 |
| Profit for the year | 15,945 | 15,305 |
| 16,552 | 16,331 | |
| TOTAL EQUITY | 16,847 | 16,626 |
| UNTAXED RESERVES | 454 | 456 |
| Long-term liabilities | ||
| Provisions for pensions | 213 | 229 |
| Current liabilities* | ||
| Accounts payable | 424 | 224 |
| Tax liabilities | 27 | - |
| Other liabilities | 350 | 324 |
| Accrued expenses and prepaid income | 359 | 280 |
| 1,160 | 828 | |
| TOTAL LIABILITIES | 1,373 | 1,057 |
| TOTAL EQUITY AND LIABILITIES | 18,674 | 18,139 |
| Pledged assets | - | - |
| Contingent liabilities | 12,034 | 8,376 |
* No current liabilities are interest-bearing.
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