H&M to switch from USD to RMB?

Swedish fashion retailer H&M Hennes & Mauritz Ab (OMX: HM B) is considering sourcing its clothes in Chinese Yuan instead of U.S. Dollars, Wall Street Journal reported on Thursday. Currently four fifths of its sourcing transactions are done in USD even though the majority of its clothes originate from Asia and most of its revenues come from Europe. This means that all things being equal, Dollar strength versus the Euro is bad for the company.

The U.S. Dollar is gradually losing its status as the reserve currency of the world as other countries are starting to worry about the deteriorating fiscal outlook in the States as the lone superpower tries to cling onto its dominance in a world where globalization has shifted balance of wealth and well-being. H&M said a lot of its rivals have already made the switch into RMB.

In China it has been and sometimes still can be very frustrating for a foreign owned entity to go from Kronor/Euros to Dollars to Chinese Yuan, resulting in transaction costs at every inflection point. While H&M undoubtedly has it far easier, Chinese authorities want to see such a change take place. They are gradual in their approach to increase the importance of the renmimbi while carefully monitoring the implications, as recently signalled by yuan denominated futures contracts and easing cross border currency transactions. There has even been talk of a free trade area involving China, Japan and South Korea.

Strong H1 report from H&M

Investors were expecting strong numbers from H&M Hennes & Mauritz Ab (OMX: HM B) but got even more than they were hoping. Comparable sales during the first half-year were up by 3 percent. In Swedish kronor, sales excluding VAT were around 59.5 billion, an increase of 14%. In the second the numbers were more of the same, with the 31.7 billion total sales number excluding value added tax being a 15% improvement while comparable unit sales were up by 2%.

But these numbers were already known for investors, since the company announces monthly sales numbers. What was most positive was that the margins kept stable, with gross margin at 61.7% and operating margin up to 17.5% from 17.3%. This translates to six month gross profit of 35 billion, operating profit of 10.4 billion and profit after taxes of just under 8 billion for earnings per share of 4.81 SEK. Second quarter profit was 5.2 billion, up strongly from 4.25 billion a year ago.

The growth plans are on track with five new markets in 2012 being Bulgaria, Mexico, Latvia, Malaysia and Thailand. Online sales in the USA will be initiated in the autumn and store contracts are in place for 2013 in Estonia (as announced by Citycon (OMXH: CTY1S) today) and Indonesia. CEO Karl-Johan Persson called current fashion retail market ”challenging” so the fact that H&M managed to grow market share and maintain good financial performance was especially gratifying.

H&M up after Q2 sales numbers

H&M Hennes & Mauritz Ab (OMX: HM B) released May 2012 and second quarter sales numbers this morning. In May the sales from comparable units were up by 3% while total sales grew by 12% in local currencies. In the second quarter overall, comparable unit sales grew by 2% and total sales by 12%. They totalled nearly 37 billion SEK including VAT for the 1 March to 31 May quarter. With the Value Added Tax excluded, sales amounted to 31.65 billion, an increase of 15%. The company is due to release its six-month report next Wednesday

H&M teams with Maison Martin Margiela

Hennes & Mauritz H&M (OMX: HM B) said in a press release that it has entered into an exclusive collaboration with Maison Martin Margiela for 2012 Autumn/Winter season. Maison Martin Margiela pieces consisting of garments and accessories for men and women will be offered in around 230 H&M stores worldwide (and online) from November 15th. The French fashion company promises to surprise in how it combines its and H&M’s fashion.

H&M April sales number now all but forgotten

H&M Hennes & Mauritz Ab (OMX: HM B) posted a small gain today to close out the week after being raised to Selected list at Cheuvreux from an earlier rating of outperform. They now give the fashion chain a 260 SEK target price. Its share currently stands just below 220. The company has had a little bit of a wobbly couple weeks after April 2012 sales released last week not all too unexpectedly broke the run of sales increases with a 1 percent decline overall and 10% slump in comparable units mainly due to adverse weather and calendar effects. Today the company certainly put on a more positive face and it was even trending worldwide on Twitter minutes earlier for no particular reason.

H&M being blamed for choosing a dark swimsuit model

Swedish Cancer Society Cancerfonden blasted H&M Hennes & Mauritz Ab (OMX: HM B) in DN.se on Thursday. The patronizing opinion piece originated from the fear that particularly young people would be getting an unrealistic ideal from a recent advertising campaign, where H&M chose a Brazilian model who naturally appears more tanned than your average Swede, to contrast their swimwear. The worry here is that readers would then start to want to emulate the model in question and try to become equally tanned, risking deadly skin cancer.

While the issue is of course a serious one, as melanoma cases continue to increase world-over, Cancerfonden does not come out of this smelling like roses either. The authors of the opinion piece claimed the advertising campaign will result in H&M being responsible for numerous skin cancer deaths. Not only is that claim rather onerous, the innuendo here is that H&M should only use "certain type of models in its campaigns". H&M did not take criticism seriously at first, but as critical voices started to escalate the company, which is no stranger to controversial advertising, apologized for any perceived harm done and promised to look into the matter.

H&M sales up strongly in March, April likely to look weaker

H&M group’s total sales in March 2012 with Value Added Tax included in local currencies grew by 26% vs. March 2011. The comparable unit number shows a 16% sales growth. The company said that favourable weather and positive calendar effect played a part in the positive development. The comparison period last year was particularly weak.

These temporary issues will be reversed in April and the company said a negative effect will thus be seen in headline numbers for the ongoing month, particularly since last year April was a very strong month. Even after correcting for these seasonal and one-off factors, the sales development is showing a good trajectory for 2012 so far.

On the 31st of March the company had added 270 shops vs. last year, pushing the total up to 2517. Even though the company had already given a good proxy for March sales in its Q1 report, when it said sales were up by 22% for March 1-27 period, the markets have taken them positively and the stock has climbed 1.5% approaching home stretch of the trading day.

Handels strike would affect many listed companies

Swedish Commercial Employees' Union Handels has issued a strike warning. It would start after Easter celebrations on April 13th. While strikes are rare in Sweden, Handels has used the threat on occasion in recent years.

Negotiations with employer’s organization Svensk Handel broke down several days ago. Naturally Svensk Handel is opposed of such a move and thinks it would be very damaging to the Swedish economy. The union demands 860 SEK wage increase to retail sector employees plus 100 SEK extra to narrow the gap in between male-female earnings.

The warning covers warehouses and stores with some 5600 employees and 65 workplaces. Since certain big wholesalers are involved, it could also have a trickle down effect on other smaller companies. Among listed companies affected would be

Clas Ohlson (OMX: CLAS B)
Lindex fashion chain, a subsidiary of Finnish Stockmann (OMX: STCAS, STCBV)
Hemköpskedjan AB and WiLLY:S AB, subsidiaries of food retailer Axfood AB (OMX: AXFO)

Building, contracting and industrial sectors retailer Swedol AB (STO: SWOL B)
Steel trading and services firm BE Group Sverige (STO: BEGR)
Industrial consumables and components provicer B&B TOOLS (STO: BBTO B)

H&M Hennes & Mauritz (OMX: HM B)
Large retailer ICA AB, which is 40% owned by Hakon Invest AB (STO: HAKN)
KappAhl (STO: KAHL)
Car spare-parts chain Mekonomen (STO: MEKO)

New H&M luxury brand rumoured

Swedish fashion industry is whispering of a possible new luxury brand being planned by H&M (OMX: HM B). Dagens Industri wrote about the rumours today, noting that CEO Karl-Johan Persson had previously said the company may expand their offering with new concepts.

Collection of Style (Cos) fashion line, which is aimed at a more higher-end target group than what is H&M’s traditional offering, was started under his watch and new Cos stores have been opened at a fast speed. The rumoured new line would be even more luxurious.

The company has not confirmed any of the rumours and if they are true, most of its own employees are in the dark as well. Dagens Industry contacted a company spokesperson who said that while they are constantly looking for new opportunities, she has no knowledge of any new brand coming out. Hennes & Mauritz gained almost 1% in Friday action.

H&M reports strong February 2012 and Q1 sales numbers

H&M group (OMX: HM B) released February 2012 sales numbers on Thursday. Sales including value added tax increased by 13% in local currencies and 2 percent in comparable units. This is the third month in a row with double-digit gains in local currencies and positive numbers in comparable units. Leap day contorts comparisons somewhat. H&M said that it added approximately 3 percentage points into February 2021 sales.

In the first quarter from 1 December 2011 to 29 February 2012 sales in SEK amounted to 32.5 billion (28.7) including VAT. The increase vs. corresponding quarter last year was 13 percent in local currencies and 3 percent in comparable units. H & M Hennes & Mauritz AB’s stock reacted positively to the news. In the past week the stock advanced almost 5%.

Largest companies in Stockholm stock exchange

Newspaper Dagens Industri noted the fact that after a poor fourth quarter performance and subsequent fall in the stock price, Ericsson has dropped out of the podium when the largest companies in Swedish stock exchange are listed. Engineering firm Alfa Laval rises to replace it at number 3. Clothing retail giant H&M is far ahead of the field with Nordea Bank coming in at number 2.

Top 10 consists of mainly banks and engineering companies. Firms that have their primary listing elsewhere such as AstraZeneca and ABB aren't included. Here is the current list as compiled by the newspaper (market cap in SEK/billions, excluding unquoted shares such as H&M class A):

1. H&M 327,3
2. Nordea Bank 239,8
3. Atlas Copco 199,2
4. Ericsson 198,8
5. TeliaSonera 196,5
6. Volvo 194,2
7. Sandvik 125,9
8. Svenska Handelsbanken 126,4
9. Swedbank 114,3
10. Skandinaviska Enskilda Banken 95,3

H&M fourth quarter 2011 results out

The H&M Group’s (OMX: HM B) fourth quarter report for 2010/2011 did not contain any major surprises but was perhaps somewhat more downbeat than expected. Sales including Value Added Tax increased by 6 percent in local currencies and declined by 3 percent in comparable units. In Swedish Kronor the sales excluding VAT were a hair under 31 billion with gross profit at 19.15 billion. December sales were up against 2010 numbers. Profit after taxes stood at 5.357 billion aka. 3.24 per share.

The company is planning to add around 275 stores in 2012 with Bulgaria, Latvia, Malaysia and Thailand introduced as completely new markets in early 2012. The company is also planning to open up its first shop in Mexico somewhere in the autumn. Most new stores will be in China, U.S., UK and Germany. H&M’s new Collection of Style (COS) concept, which sells minimalized design of the highest function and quality at prices somewhat above those of H&M stores will expand to Hong Kong, Italy, Finland and Kuwait

CEO Karl-Johan Persson is satisfied with H&M’s strong standing in a challenging market. Cost inflation has remained high. HM’s board is proposing a dividend of 9.5 SEK a share. The share is trading relatively flat at around 220 SEK in an upward trending market.

Novo Nordisk tops clean capitalism list

Nordic companies are clearly overrepresented in Corporate Knights 8th annual ranking of the most sustainable companies in the world. Danish pharmaceutical company Novo Nordisk (OMX: NOVO B) was chosen as the most sustainable company by a wide margin. Last year Novo was down in 16th place. It scored particularly well in this study in energy productivity and in CEO vs. average employee compensation.

The idea of the list is to find companies who not only act in the interests of the business but also for the entire planet in doing so. That means that companies fully take social, economic and ecological costs and benefits into account. A situation where a company’s private optimum level of production differs from the social optimum due to externalities is one type of market failure, which is not normally addressed on the corporate level.

Other Nordic companies close to the top are oil producer Statoil ASA (OSE:STL) at number 3 and Danish biotech company Novozymes A/S (OMX: NZYM B) at number four. Aluminium producer Norsk Hydro ASA (OSE: NHY) and Swedish industrial group Atlas Copco (OMX: ATCO A, ATCO B)) round up the top ten.

Below the top ten one can also find Swedish telecom company TeliaSonera (OMX: TLSN, OMXH: TLS1V) at 13, oft-maligned oil refining and marketing company Neste Oil Oyj (OMX: NES1V) from Finland at 19, Danish wind turbine manufacturer Vestas Wind Systems A/S (OMX: VWS) at number 31, Swedish heavy trucks and buses manufacturer Scania AB (OMX: SCV B) at 36, Reverse vending machines firm Tomra Systems ASA (OSE: TOM) at number 39, Finnish retailing conglomerate Kesko Oyj (OMX: KESB) at 43, Norwegian financial services company StoreBrand ASA (OSE: STB) at 54, Swedish retail-clothing giant H & M Hennes & Mauritz AB (STO:HM B) at 67 and Danish medical devices firm Coloplast A/S (OMX: COLO B) on 84th place.

Plenty of news, Nordic stocks in the black on Thursday

H & M Hennes & Mauritz AB (STO: HM B) November 2011 sales decreased by 1% in comparable units. Total sales were up by 9%. In one year the company added 266 new stores to bring the number up to a total of 2472. Fourth quarter sales were over 36.1 billion SEK including VAT (unaudited, 30.9 billion VAT excluded). The numbers were below expectations. Retailers have blamed warmer than expected weather for sluggish sales as of late. H&M gained 1% in today’s session on high volume.

CEO Magnus Hall of Swedish paper firm Holmen (OMX: HOLM B) told Reuters news agency that orders for paperboard and printing paper remain weak and may fall further in the short term, where as market for timber is already so weak that Hall does not think it can get much worse.

Metso Corporation (OMX: MEO1V) will supply world’s first commercial installation of LignoBoost technology to Domtar’s Plymouth North Carolina pulp mill in USA. LignoBoost separates and collects lignin from pulping liquor and Metso feels this order is an important breakthrough for the adobtation of the technology.

Biotechnology company NorDiag ASA (OSE: NORD) more than doubled its stock market value in a day. The news that its US subsidiary NorDiag Inc entered into a five-year distribution agreement with AutoGen Inc, wherein AutoGen will distribute NorDiag’s products to North American Life Science market was the catalyst. Financial details weren’t disclosed but NorDiag expects a significant sales impact from 2012 and beyond.

As a continuation of the news from the other day on confirmed Pancreas Disease in Central Norway, Salmar ASA (OSE: SALM) said a confirmed detection of the disease has been made in one of its sites. The site has 2 million fish, with around half a million of them vaccinated against PD, and a book value of 50 million NOK. Salmar’s stock price was down slightly.

Scana Industrier (OSE: SCI) shot down 20% after a trading halt this morning. The company announced plans for a fully guaranteed rights issue for 120 million new shares. The existing shareholders shall have pre-emptive rights with non-tradable rights. Eight largest shareholders and two other shareholders are behind the full guarantee. The company is also negotiating on a new three year bank facility to replace the outstanding multi-currency term loan and revolving credit facility from 2007 with maturity in October 2012. The price action in the past couple of months suggests this did not come as a terrible surprise. Scana recovered in late trading to finish the day down by 4%.

Electromagnetic Geoservices ASA (OSE: EMGS) and world’s largest oilfield service company Schlumberger intend to enter into a cooperative agreement from January 3 2012 onwards. The parties will offer their expertise in marine electromagnetic related fields of processing, advanced modelling and earth model building and Schlumberger will withdraw from the ongoing patent disputes. The companies will cross-license patents relevant to the CSEM acquisition business. EMGS ended the day up by more than 12%.

Christmas sales reports from Nordic countries are mixed, with some chains already offering discounts that traditionally start after holidays. Finnish retailing conglomerate Kesko (OMX: KESB) managed to grow sales by 7.4% in November.

Nordic Stocks news in brief from 05.12.2011

Financial Times says that S&P is about to have all AAA-rated Euro countries on negative creditwatch. Finland is among those precious few countries still enjoying low borrowing costs in the eurozone.

According to an article in the Wall Street Journal, Hennes & Mauritz is planning to forge ahead aggressively in China. H&M plans to move onto second tier and even smaller cities as the purchasing power of the rising middle cls in China increases. The article also talks about important nuances concerning H%M’s dealings in China.

Orkla ASA (OSE: ORK) notified in the after the trading session that it has sold its entire holding of 23 million shares in reverse vending machines firm Tomra Systems (OSE: TOM), representing 15.5% of the total share capital of Tomra, to Latour Investment AB (STO: LATO B). The price per share was 38.5 NOK. Tomra Systems closed at 40 NOK per share on Monday.

Financially troubled home decoration retailer Tiimari (HEL: TII1V)warned its Gallerix businesses’ revenue in Sweden was lower than forecasted in November and subsequently lowered Tiimari segments full-year EBITDA guidance from lower than last year to significantly lower than last year (and still obviously negative). Gallerix business unit has been the lone unit of the group posting positive results since Tiimari acquired it in 2007. Now it may post a loss for the year.

Swedish internet publication DagensHandel.se interviewed Gallerix’s CEO on Monday and he said that Tiimari has been gauging interest for the sale of the company. The CEO Dan Crewe said that synerge benefits in between the companies have proven smaller than expected. Selling right after the company posts a loss on the cheap would certainly be a logical continuation in Tiimari’s continued destruction of shareholder value.

Pandora (CPH: PNDORA) and D/S Norden (CPH:DNORD) will be replaced by AP Moller-Maersk A/S A-shares (CPH:MAERSK A) and Nordea ((OMX: NDA SEK) (OMXH: NDA1V) (OMX: NDA DKK)) in OMX Copenhagen 20 index (20 most traded companies in Copenhagen exchange) as a part of the semi-annual review on 19th of December. After that the index will be consisted of the following stocks: Carlsberg B, Chr. Hansen, Coloplast B, Danske Bank, DSV, FLSmidth, GN Store Nord, Lundbeck, Mærsk A, Mærsk B, NKT, Nordea, Novo Nordisk, Novozymes, Sydbank, TDC, Topdanmark, Tryg, Vestas and William Demant.

AstraZeneca (LSE: AZN, OMXS: AZN, NYSE: AZN) and UK’s Medical Research Council (MRC) have struck an agreement granting UK academics access to 22 compounds developed by AstraZeneca.

H&M same store sales down 6% in July 2011

H&M Group (OMX: HM B) comparable store sales decreased by 6 percent in July. Total sales were up by 3%.The stock has recovered a bit and is now down one percent for the day at 200 SEK level.

Some June sales numbers

Retail-clothing giant H&M group’s (OMX: HM B) total sales in June increased by 5 percent in local currencies compared to June 2010. Sales were down in comparable units by 4 percent. The numbers were a minor disappointment to investors and H&M closed slightly in the red.

Hardware, home and leisure chain Clas Ohlson AB (OMX: CLAS B) sales increased 5% in local currencies and 8% overall in June compared to June 2010. The firm has added 22 stores since last year and now has 143 retail stores. The stock backed 1,5% on after the news Friday.

H&M second quarter 2010/2011

Hennes & Mauritz (STO:HM B) released 2010/2011 half-year interim report. Sales were up strongly in local currencies but profit was down markedly compared to strong 2009/2010 period. This was only partially due to currency related issues as high cotton price and incentive program provision cut into profit. H & M closed down 2.3%. Full report is available here.