H&M

Sector: Apparel specialty retail Countries of operation: China, France, Germany, Italy, the Netherlands, Russia, Sweden, Switzerland, the UK, the US and 65 other countries across Africa, Asia, Europe, Oceania, North and South America Key product categories: Accessories, apparel, beauty and homeware products Annual Metrics [caption id="attachment_148720" align="aligncenter" width="700"] Fiscal year ends on November 30 of the same calendar year
*Trailing 12 months ended February 28, 2022 [/caption]   Summary Founded in 1947 and headquartered in Stockholm, H&M Hennes & Mauritz AB (known as H&M) is a Swedish retailer of accessories, apparel, beauty and homeware products. The company operates across 75 markets with physical stores (including franchise markets) and 54 online markets around the world. It owns eight banners: & Other Stories, Afound, ARKET, COS, H&M, H&M Home, Monki and Weekday. The company operates 4,721 stores across the globe as of February 28, 2022. The company also operates cafés globally. Company Analysis Coresight Research insight: In recent years, H&M has invested heavily in its digital operations. It has also improved its inventory composition and product offering—from both a design perspective and a supply/flow angle. These measures have helped the company to restore topline growth, alleviate margin and cash flow pressure, and gain market share. As of January 28, 2022, the company’s loyalty program has over 150 million members. H&M has been expanding its international presence. In 2022, the company will launch stores in six new markets, starting with the opening of its Cambodia store in March 2022 via franchise. The other five markets include company-owned stores in Ecuador, Kosovo and North Macedonia and franchise stores in Costa Rica and Guatemala. Furthermore, the company plans to open its first store in Albania in 2023. The company is also expanding its online operations internationally. It launched H&M online in Colombia and Peru in January 2022 and H&M Home online in India in March 2022. In April 2022, H&M’s digital marketplace Afound expanded in Europe through the opening of afound.com in Denmark, followed by Norway in spring/summer 2022. H&M will launch its COS brand online in Australia in late 2022. H&M is also extending its secondhand clothing platform Sellpy, which launched in additional 20 markets in June 2021, increasing the platform’s total customer markets to 24. To enhance customer experience, the company improved touch points for Sellpy by launching an app in February 2022. Furthermore, the company is targeting new consumer segments through its recently launched subscription-based brand Singular Society, which offers beauty, fashion and homeware products. H&M continues to accelerate its sustainability initiatives, including expanding its partnership with textile traceability platform TextileGenesis in April 2022 to roll out traceability technology for recycled polyester and all man-made cellulosics in a phase-by-phase approach throughout 2022. Through this roll out, H&M aims to trace more than 200 million items by the end of 2022—enabling improved supply chain traceability and transparency. The company expects these measures to ensure the long-term positive development of the group.

Tailwinds

Headwinds

Fast-growing online business increasingly driving consumers’ shopping journeys An efficient store optimization program (one-quarter of leases are up for renewal each year) could help to absorb much of the loss of sales, through sales transfer to other stores or to its digital platform More than 150 million members of its loyalty program Opportunity to expand in new markets, such as India Expansion of secondhand clothing platform Sellpy to new markets Strong sustainable initiatives attract customers, investors and employees

Heightened competition in the apparel retail market Weak global economic environment High freight costs Fluctuating currency exchange rates

Strategy In its April 2022 annual report, H&M outlined the following five key focus areas, aiming to meet customers’ expectations and to futureproof the group: 1. Develop a fully sustainable business

• Become a fully circular business across its entire value chain by 2030.
• Use 100% recycled or sustainably sourced materials by 2030—with 30% sustainably sourced materials by 2025.
• Source 100% renewable electricity for its operations by 2030.
• Become climate positive (reduce greenhouse gas emissions by more than it generates) throughout its value chain by 2040. Reduce carbon emission by 56% by 2030, from its 2019 baseline.
• Form January 1, 2022, onboard only those new suppliers who do not have on-site coal boilers in their factories—as part of H&M’s long-term plan to phase out coal from its supply chain.

2. Develop technology infrastructure

• Invest in technology infrastructure, including developing robust scalable platforms that enable faster development of various customer apps and new technologies.

3. Enhance customer experience

• Broaden and improve product assortment by integrating the right blend of fashion, quality, price and sustainability across its brands.
• Enhance the omnichannel experience through continued integration of physical and online stores.
• Improve physical stores through the continued development of new concepts and the optimization of its store portfolio.
• Enhance online stores through faster and more flexible delivery and payment options.

4. International expansion

• Expand digitally in new markets, including in India.
• Expand its physical store network with a focus on key growth markets, such as the US and the UK.

5. Increase speed and efficiency in product flow

• Make the supply chain faster, more flexible and more efficient.
• Launch initiatives using advanced data analytics and artificial intelligence (AI).

Revenue Breakdown (FY21)   Company Developments  

Date	Development
April 29, 2022	H&M expands its partnership with textile traceability platform TextileGenesis to roll out traceability technology for recycled polyester and all man-made cellulosics in a phase-by-phase approach throughout 2022. Through this roll out, H&M aims to trace more than 200 million items by the end of 2022—enabling improved supply chain traceability and transparency.
April 28, 2022	H&M’s digital marketplace Afound expands in Europe through the opening of afound.com in Denmark, followed by Norway in spring/summer 2022.
April 28, 2022	H&M Home opens a new standalone concept store in Berlin, Germany, with new features including an in-store café and an orangery with seasonal flowers and plants.
April 6, 2022	H&M Foundation awards a total of €1.0 million ($1.2 million) grant to the five winners of Global Change Award 2022 for their efforts to make the apparel industry planet positive.
March 3, 2022	H&M launches H&M Home in India with an online store at hm.com and on Flipkart-owned fashion marketplace Myntra. This will be followed by the introduction of H&M Home in H&M India’s existing store in Ambience Mall, Delhi, through a shop-in-shop format.
March 2, 2022	H&M temporarily suspends its operations in Russia amid heightening war tensions.
February 23, 2022	H&M’s resale platform Sellpy launches an app, adding new touchpoints for an enhanced shopper experience.
January 28, 2022	H&M announces that its fashion and lifestyle brand ARKET will open a new flagship store in Paris in autumn 2022—ARKET’s first brick and mortar location in France.
November 16, 2021	H&M launches circular design tool “Circulator” to enable the company to create products fit for a circular economy, as part of H&M’s ambition to have all its products designed for circularity by 2025.
November 2, 2021	H&M debuts a virtual all-vegan collection and fashion show through Nintendo’s video game series Animal Crossing.
October 5, 2021	H&M collaborates with the UK-based actor and activist John Boyega on a new sustainable menswear collection.
October 4, 2021	H&M expands its on-demand services with the launch of Creator Studio, a global merchandising platform that functions on a lean production process and is integrated with made-to-order digital printing and e-commerce setup. Complementing this, the company also invested in Printify, a transparent print-on-demand network.
September 30, 2021	H&M partners with US-based skate and streetwear brand No Fear for Autumn 2021.
September 10, 2021	H&M HOME opens its first concept store in France. The store is set across two floors covering 724 square meters and offers products, including H&M HOME’s range of furniture and lighting and a curated selection of external brands.
September 4, 2021	H&M opens its first store in Panama.
August 9, 2021	H&M announces its collaboration with Indian fashion designer Sabyasachi for the launch of Sabyasachi x H&M collection. The new collection, consisting of both menswear and womenswear, becomes available in selected H&M stores worldwide and online on HM.com from August 12, 2021.
June 10, 2021	H&M joins the EU Commission’s Green Consumption Pledge Initiative and strengthens its commitment to become climate positive by 2040.
May 31, 2021	H&M announces that its second-hand fashion platform Sellpy has expanded into 20 new European markets.
May 27, 2021	H&M announces that Singular Society has moved beyond the soft launch phase and is now available for everyone to join. Soft launched in Autumn 2020, Singular Society is a membership-only brand that offers beauty, fashion and homeware products.
March 24, 2021	H&M Foundation commits SEK 300 million ($48 million) to achieve UN Sustainable Development Goals (SDG) 2030. SDG is collection of 17 interlinked global goals, including in climate change, responsible consumption and production, and sustainable cities and communities.
February 4, 2021	H&M’s brand Weekday introduces a limited-edition jeans collection made from upcycled textile waste.
February 2, 2021	H&M announces the expansion of its second-hand fashion platform Sellpy into two new markets: Austria and the Netherlands.
January 29, 2021	H&M announces the opening of an ARKET flagship store in China in autumn 2021.
December 10, 2020	H&M soft launches Singular Society, a membership-only brand that offers beauty, fashion and homeware products. The membership plans start at €9.50 ($11.50) for five products on a monthly basis. Members can opt for an annual subscription at €7.90 ($9.60) for a monthly cost.
December 8, 2020	H&M Foundation, in partnership with The Hong Kong Research Institute of Textiles and Apparel, announces plans to invest $100 million over five years in the Planet First program, an initiative to find a sustainable solution for the fashion industry.
November 23, 2020	H&M’s off-price marketplace Afound launches beauty in its assortment. Afound offers over 1,000 articles within beauty categories including fragrances, hair care and makeup.
November 19, 2020	H&M unveils a multi-year partnership with a Swedish textile recycling company Renewcell to supply H&M with thousands of tons of Circulose fibers made from unusable textile waste, as part of its 2030 goal that aims at sourcing materials in a more sustainable way.
November 6, 2020	H&M announces that its loyalty program H&M Member now has more than 100 million members.
November 6, 2020	H&M appoints Leyla Ertur as its new Head of Sustainability, effective January 1, 2021, replacing Anna Gedda, who led the company’s sustainability initiatives from 2014.
October 8, 2020	H&M announces the expansion of its lifestyle brand ARKET in Asia, with plans to open its first store in South Korea by the end of 2021.
October 1, 2020	H&M announces that five more of its brands (& Other Stories, ARKET, COS, Monki and Weekday) will be available online in Russia in the fall season.
August 27, 2020	H&M appoints Alan Boehme as Chief Technology Officer. Previously, Boehme held various management and technology roles at Procter & Gamble and Coca-Cola.
July 16, 2020	H&M launches its ARKET brand on the Zalando fashion platform, effective August 21, 2020.
January 17, 2020	H&M expands to Central America through a franchise agreement with Hola Moda, a privately owned company that operates international fashion brands across the Central America region.
June 27, 2019	H&M expands its partnership with payment service provider Klarna to include the US market, offering frictionless checkout across all channels and enhance the shopping experience across touchpoints for US consumers.

  Management Team

• Helena Helmersson—CEO
• Karl-Johan Persson—Chairman
• Adam Karlsson—CFO
• Alan Boehme—Chief Technology Officer
• Leyla Ertur—Head of Sustainability

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Source: Company reports/S&P Capital IQ