Hennes & Mauritz (HM) Q3 2024 earnings summary

Executive summary

• Q3 2024 net sales were SEK 59,011m, down 3% in SEK but flat in local currencies, with a strong recovery in July and August after a weak start due to cold weather in Europe.

• September sales are estimated to increase by 11%, driven by well-received autumn collections and enhanced marketing.

• Major long-term investments were made in product offering, shopping experience, and brand marketing, with positive early results.

• The decision was made to discontinue the Afound brand and optimize the store portfolio, with a net reduction of about 100 stores in 2024.

• Gross margin improved to 51.1% in Q3 (50.9% last year) and 53.0% for nine months (50.3%).

Financial highlights

• Operating profit for Q3 was SEK 3,507m (down 26%), with a margin of 5.9%; nine-month operating profit rose 24% to SEK 12,682m, margin 7.4%.

• SEK 550 million in Q3 operating expenses were mainly due to increased marketing and Afound wind-down costs.

• Currency translation had a negative impact above SEK 500 million in the quarter.

• Net financial cash position was SEK 9,396m; liquidity buffer SEK 41,838m.

• Stock-in-trade increased 3% to SEK 41,738m, mainly due to extended transport times and higher sales ambitions.

Outlook and guidance

• Operating margin for 2024 is expected to be below 10%, with a continued focus on sales growth and cost control.

• Marketing investments in Q4 will remain at Q3 levels or be slightly higher, with continued product and price investments.

• Slightly higher markdowns are anticipated in Q4 to activate cautious customers.

• No specific margin guidance for 2025, but double-digit profitability remains the long-term ambition.

• Ongoing investments in marketing, store upgrades, and digital experience to drive future growth.