Hennes & Mauritz (HM) Q4 2023 earnings summary

Executive summary

• FY2023 net sales rose 6% to SEK 236,035m; operating profit including HIP allocation more than doubled to SEK 14,537m, with a 6.2% margin.

• Profit after tax increased 145% to SEK 8,723m; operating cash flow rose 37% to SEK 33,949m.

• Progress toward long-term goals through supply-chain improvements, a cost and efficiency programme, and increased reinvestment in the business.

Financial highlights

• FY gross profit rose 7% to SEK 120,896m; gross margin was 51.2% versus 50.7% in 2022. Q4 gross margin reached 53.7% versus 49.8%.

• Q4 sales were SEK 62,650m, reported flat YoY; operating margin including HIP was 6.9%.

• FY operating profit was SEK 14,714m excluding HIP and SEK 14,537m including HIP; corresponding Q4 profit was SEK 4,509m and SEK 4,332m.

• FY selling and administrative expenses were SEK 107,330m, up 1%; Q4 expenses were SEK 29,314m, down 2%.

• FY EPS was SEK 5.35 versus SEK 2.16; Q4 EPS was SEK 0.97 versus a loss of SEK 0.53.

Outlook and guidance

• FY2024 operating profitability ambition remains above 10%; long-term sales target remains 10–15% annual growth with continued high profitability.

• FY2024 capex in comparable currency is planned at SEK 11–12bn, up by as much as ~30% from 2023.

• The efficiency programme is expected to deliver annual savings of ~SEK 2bn when fully implemented; completion is planned during 2024.

• 2024 store plan: ~100 openings and ~160 closures, a net decrease of ~60; Q1 markdown costs are estimated to rise 1 percentage point YoY.

• Priorities include broadening the customer offering, integrating sales channels, investing faster in existing stores and improving customer experience.