H&M Hennes & Mauritz AB (OMX: HM B) reported Q1 fiscal year numbers for 1 December 2011 – 29 February 2012 period. Swedish fashion retailer sales including Value Added Tax increased by 13% in local currencies. Sales in comparable units (aka. excluding new stores) increased by three percent. Converted to Swedish kronor sales were above 27.8 billion.
Gross profit climbed above 15.5 billion for a gross margin of 55.8%, which decline by two percent. The group said this was due to increasing purchasing costs and the decision to keep retail prices stable. Profit after financial items of 3.7 billion and after tax profit of 2.74 billion (1.65 EPS) round up the highlight numbers.
CEO Karl-Johan Persson said that part of the input cost increase is due to higher cotton prices but that some of it can be attributed to long-term investments aimed at broadening total offering. Lately there have been rumours of a new more luxurious brand from the company. Mr. Persson said the company will be launching a completely new store chain next year.
The sales numbers for Q1 were already known beforehand but the cost side and margins disappointed investors. The stock has shed almost 5% to trade around 238 SEK at midday. Development after the reporting period has been strong with a 22 percent sales growth in local currencies for the 1 – 27 March 2012 period. A new store was opened in Sofia, Bulgaria and four other new countries will be added during 2012 (Latvia, Malaysia, Mexico and Thailand via franchise).
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