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Full-year report 2014 (1 Dec 2013 - 30 Nov 2014)

H & M Hennes & Mauritz AB
Full-year report
Full-year (1 December 2013 — 30 November 2014)

Well-received collections for all brands in the H&M Group resulted in good sales and increased market share. The H&M Group’s sales including VAT increased in local currencies by 14 percent during the financial year. Converted into SEK, sales excluding VAT amounted to SEK 151,419 m (128,562), an increase of 18 percent.

Gross profit increased by 17 percent to SEK 89,052 m (76,025), which corresponds to a gross margin of 58.8 percent (59.1).

Profit after financial items increased by more than SEK 3.4 billion to SEK 25,895 m (22,448), an increase of 15 percent.

The Group’s profit after tax increased to SEK 19,976 m (17,093), corresponding to SEK 12.07 (10.33) per share, an increase of 17 percent.

The strong result for 2014 has led to SEK 303 m being allocated to the H&M Incentive Program (HIP). The allocation to HIP in 2013 amounted to SEK 31 m. HIP is for all employees regardless of role, salary and whether they work part-time or full-time. The allocation to HIP was expensed in the fourth quarter. The significant difference in HIP allocations between 2014 and 2013 make it an item affecting comparability both in the full-year results for 2014 and in the fourth quarter of 2014.

Strong expansion during the year with a total net addition of 379 (356) new stores. The largest expansion markets were China and the US. At the end of the financial year the number of stores amounted to 3,511 stores in 55 markets.

More than 16,000 (12,000) new jobs were created in the H&M Group in 2014. The number of employees amounted to more than 132,000 (116,000) at the end of the year.

Sales increase +18 %

SEK 303 million is allocated
to H&M Incentive Program

Fourth quarter (1 September 2014 — 30 November 2014)

The H&M Group’s sales including VAT increased in local currencies by 11 percent in the fourth quarter. Converted into SEK, sales excluding VAT amounted to SEK 42,644 m (36,495), an increase of 17 percent.

Gross profit amounted to SEK 25,774 m (22,181), an increase of 16 percent. This corresponds to a gross margin of 60.4 percent (60.8).

Profit after financial items increased to SEK 7,799 (7,259), an increase of 7 percent. Before the allocation to HIP was expensed, profit after financial items increased by 11 percent.

The Group’s profit after tax increased to SEK 6,222 m (5,549), i.e. an improvement of 12 percent, corresponding to SEK 3.76 (3.35) per share. Before the allocation to HIP was expensed, profit after tax increased by approximately SEK 900 m, i.e. an increase of 16 percent.

H&M’s first stores in Manila, the Philippines, have been very well received since opening in October.

The Board of Directors proposes a dividend of SEK 9.75 (9.50) per share for the financial year 2013/2014.

Sales in December 2014 increased by 15 percent in local currencies compared to the corresponding month the previous year.

Sales in January 2015 are expected to increase by 14 percent in local currencies compared to the same month last year.

The H&M Group plans a net addition of around 400 new stores for the financial year 2014/2015. Most of the expansion will take place on existing markets. Taiwan, Peru, Macau, South Africa and India will become new H&M markets in 2015.

COS and & Other Stories will open more new stores in 2015 compared with 2014.

Belgium, Bulgaria, the Czech Republic, Hungary, Poland, Portugal, Romania, Slovakia and Switzerland will become new H&M online markets in 2015.

H&M Beauty – a new concept with a broad range of make-up, body care and hair care products – will initially be launched in around 900 H&M stores and online in autumn 2015.

Q4

Full-year report 2014 (1 Dec 2013 - 30 Nov 2014)

Comments by Karl-Johan Persson, CEO
“2014 has been a very good year for H&M. Over the full year we increased our sales by 14 percent in local currencies and by 18 percent in Swedish kronor, to SEK 176.6 billion including VAT. Profit for the year after tax, before the allocation to HIP, increased by 18 percent to over SEK 20 billion. Well-received collections for all our brands and continued strong expansion both in stores and online have helped increase our market share and have further strengthened our position in the market.

We created 16,000 new jobs within the H&M Group in 2014 and now have more than 132,000 employees. Our employees and the H&M spirit – our shared values – are the key to our success, and the good financial results for the year mean that SEK 303 m has been allocated into the H&M Incentive Program (HIP). HIP is for all employees in the H&M Group and aims to acknowledge the employees’ daily and long-term commitment.

As always, we worked on continuous improvements during the year in order to be a leader in everything we do and the preferred choice for our customers. We have made many long-term investments in IT, online sales, new brands and in broadening the product range. Additionally, our extensive sustainability work is a further example of how we give customers added value. Our customers should always know that when they shop with us, the product has been produced with the greatest possible consideration for people and the environment. While we are continuing our long-term investments, at the same time we can see our investments in areas such as online starting to bear fruit. This year we opened our online store in four new large markets: France, Italy, Spain and China. These openings, combined with further improvements in our online store, have naturally contributed to the year’s good sales development. We will therefore be rolling out H&M’s online store to nine new markets in 2015: Belgium, Bulgaria, the Czech Republic, Hungary, Poland, Portugal, Romania, Slovakia and Switzerland. In 2014 we opened a net addition of 379 new stores – which is more than one store a day. And in 2015 we will be opening even more stores; in total, we plan a net addition of around 400 new stores. New markets planned for 2015 are Taiwan, Peru, Macau, South Africa and India. The greatest expansion will take place in existing markets where there is still great potential to grow further. The most new stores will open in China and the US, but also in other large markets such as Poland and Germany. COS and & Other Stories plan to open even more stores this year than in 2014.

“Strong sales and
profitability in 2014 led to an
allocation of SEK 303 million
to the H&M Incentive
Program (HIP) for our
employees.”

Early in 2014 we successfully launched H&M Sport, and in the autumn our expanded shoe range was gradually launched in selected H&M stores and online. As a further step in broadening H&M’s product range, in autumn 2015 we will start the launch of H&M Beauty – a new and broad concept for make-up, body care and hair care with high quality value-for-money products in a specially produced design that we have great belief in. H&M Beauty, which will replace our current ownbrand cosmetics, will be launched already this year in approximately 900 H&M stores in around 40 markets as well as in our online markets.

We have another exciting year ahead of us, with new opportunities and challenges. 2015 has got off to a good start, with strong sales in both December and January. Although the increasingly expensive US dollar will affect our sourcing costs, we will make sure that we always have the best customer offering in each individual market in terms of fashion, quality, price and sustainability, which form the basis of our business idea.”

SEK m
Net sales
Gross profit

Q4
2014
42,644
25,774

Q4
2013
36,495
22,181

Full year
2014
151,419
89,052

Full year
2013
128,562
76,025

gross margin, %

60.4

60.8

58.8

59.1

Operating profit

7,731

7,182

25,583

22,090

18.1

19.7

16.9

17.2

68
7,799
-1,577
6,222

77
7,259
-1,710
5,549

312
25,895
-5,919
19,976

358
22,448
-5,355
17,093

3.76

3.35

12.07

10.33

operating margin, %
Net financial items
Profit after financial items
Tax
Profit for the period
Earnings per share, SEK

2

Full-year report 2014 (1 Dec 2013 - 30 Nov 2014)

Sales
Well-received collections for all brands and continued strong expansion led to increased sales and continued market share gains for the H&M Group in a fashion retail market that in many markets was still characterised by a challenging macroeconomic situation and also by unusually warm autumn weather.

SEK m incl VAT

200,000

+ 18%
176,620

150,000

150,090

100,000
50,000
0

2013
+ 17%

2014

42,610 49,656
Q4

H&M Spring Collection

Full year

Sales including VAT converted into SEK increased by 17 percent to SEK 49,656 m (42,610) in the fourth quarter. Sales including VAT increased in the financial year by 18 percent and amounted to SEK 176,620 m (150,090).

Sales excluding VAT increased by 17 percent to SEK 42,644 m (36,495) in the fourth quarter and by 18 percent to SEK 151,419 m (128,562) during the financial year 2014. Sales including VAT in local currencies increased by 11 percent in ...

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245 248 249 25 25.4 25.7 250 253 255 256 257 258 259 26 26.49 26.65 26.69 261 262 264 269 27 27.34 271 272 273 274 276 277 278 28 281 285 286 287 29 291 295 3 3.35 3.4 3.76 30 303 304 305 306 308 309 31 31.15 312 314 316 318 32 320 321 324 325 326 327 328 33 336 34 347 348 35 35.8 350 351 355 356 358 359 36 360 367 369 37 370 372 373 374 375 379 38 38.4 381 383 386 388 389 39 391 393 394 397 399 4 40 400 403 404 405 407 408 41.3 417 418 419 42 422 424 425 426 428 43 431 433 435 436 439 44 44.1 440 445 446 448 45 451 454 456 458 46 462 463 464 467 468 469 47 47.1 470 472 48 482 483 487 488 489 49 490 492 495 496 5 5.9 50 50.0 50.3 500 502 506 509 51 511 513 516 52 520 522 524 525 528 529 53 53.1 535 537 548 549 55 552 553 556 556042 56 562 566 568 57 575 577 58 58.7 58.8 583 588 59 59.1 590 591 597 598 6 60 60.4 60.8 600 602 607 610 612 613 615 616 620 624 626 63 630 636 64 642 644 645 648 649 65 650 654 655 656 659 66 667 67 674 675 676 677 68 68.2 68.9 681 682 688 690 693 695 699 7 7.6 70 701 704 705 708 709 71 710 719 72 72.5 72.8 720 721 722 723 724 73 73.0 73.3 731 733 735 738 74.6 74.9 741 748 75 750 754 76 76.1 76.2 764 77 773 774 775 776 78 79 791 792 794 797 799 8 8.00 80 804 807 81 810 811 813 814 819 82 821 824 828 829 830 831 834 835 836 84 840 844 845 847 85 851 856 858 86 860 863 865 866 867 868 87 870 874 876 877 878 88 880 883 89 890 893 895 897 899 9 9.50 9.56 9.75 90 900 903 905 907 909 91 912 913 916 917 918 919 92 920 923 927 93 932 935 936 94 940 941 942 944 945 947 948 949 950 951 953 957 958 959 960 962 965 966 969 971 976 979 981 982 983 99 990 991 992 993 994 997 998 999 ab absolut accord account accru acknowledg act action activ actuari ad addit administr adopt affect africa ahead aim alloc alreadi also although alway america amount annual anoth appli applic appropri approxim april area around asia asset attribut australia austria autumn avail averag balanc base basi bear beauti beckham becom begin behaviour belgium belief benefit best 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