Hennes & Mauritz (HM) Q2 2024 earnings summary

Executive summary

• Q2 2024 delivered the strongest profit in many years, with net sales up 3% to SEK 59,605m, gross profit up 11% to SEK 33,569m, and operating profit up 50% to SEK 7,098m; strong cash flow and improved profitability were highlighted.

• Spring and summer collections were well received, driving positive sales trends and growth in key markets including Central and Eastern Europe, Asia, and North America.

• Four consecutive quarters of profit improvement, with a focus on strengthening the brand, customer experience, and accelerating investments.

• Robust financial position supports continued profitable, long-term, and sustainable growth.

Financial highlights

• Q2 net sales increased by 3% to SEK 59,605m year-over-year; six-month net sales up 1% to SEK 113,274m.

• Q2 gross profit rose 11% to SEK 33,569m, with a gross margin of 56.3% (up from 52.7%).

• Q2 operating profit reached SEK 7,098m, up 50% year-over-year; adjusted for one-time costs, SEK 7,297m (12.2% margin).

• Cash flow from operating activities in Q2 was SEK 12,600m, up SEK 5,101m from 2023.

• Stock-in-trade at 31 May 2024 was SEK 38,518m, down 1% year-over-year; 16.3% of rolling twelve-month sales.

Outlook and guidance

• Operating margin target of 10% for 2024 remains, but external headwinds (input costs, currency) make achieving it more challenging.

• Sales growth in the upper part of low to mid-single digits needed in H2 to reach margin target.

• CapEx for 2024 expected at SEK 11–12 billion, with increased investment in store portfolio and high-growth markets like India.

• Higher markdowns anticipated in H2 to drive sales and activate customers amid external pressures.

• June 2024 sales expected to decrease by 6% in local currencies due to strong 2023 comparatives and weather impacts.