2Q16 Results

Excluding the effects of local currencies against the Swedish krona, H&M’s 2Q16 sales in the UK were flat, compared with an increase of 5% for all of H&M’s markets. The UK is H&M’s third-largest market after Germany and the US. Sales in March and April were significantly below the company’s plan, as they were negatively affected by unseasonably cool weather during the period. Sales improved in May, increasing by 9%. H&M’s profit in 2Q16 fell by 17%, to SEK5.36 billion from SEK6.45 billion in the same period last year, versus expectations of SEK5.46 billion. Profit was affected by the continued negative impact of the US dollar, but also by increased markdowns and costs related to long-term investments, as well as by lower sales. For the first half of the year, H&M’s sales increased by 7% in local-currency terms (including VAT). The company has opened nine new online markets thus far this year, bringing its total number of online markets to 32, including Japan and Greece, which are new. H&M will open online markets in Canada and South Korea during the fall, and the company plans to continue its fast rollout in the online space. As of May 31, H&M had 4,077 physical stores in 62 countries, up from 3,639 on the same date last year. The company plans to open 425 new stores this year in markets that include Puerto Rico, New Zealand and Cyprus. In 2017, H&M plans to open stores in four or five new markets, including Colombia.