H & M Hennes & Mauritz AB (publ)
Q3 2022 Earnings Call Transcript
Published:
- Operator:
- Welcome to the H & M Conference Call Nine Months Report of 2022. For the first part of the call, all participants are in listen-only mode during the speaker’s presentation, and afterwards, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. Today, I am pleased to present Nils Vinge, Head of Investor Relations. I will now hand you over to our speakers. Please begin.
- Nils Vinge:
- Thank you. Hi, everyone, and thank you all for joining us today. Welcome to the telephone conference about the H & M Group’s nine months results 2022. With me today is our CEO, Helena Helmersson; and our CFO, Adam Karlsson. We will now start with a short summary of the third quarter, and after that, we will be happy to answer your questions. You’ll find the nine-month report on hmgroup.com Investor Relations. Now I’ll hand over to you, Helena.
- Helena Helmersson:
- Thank you, Nils. Sales and profitability in the third quarter was largely impacted by the effects of our decision to post sales and then wind down the business in Russia. This explains half of the decrease in profits compared with the third quarter last year. In common with the rest of the industry, sales were weak in many of our major markets at the start of the period, but picked up gradually despite a heat wave in several European countries and some remaining delays in the supply chain. The quarter was also impacted by several other external headwinds such as increased raw materials and freight prices, as well as stronger U.S. dollar. This resulted in substantial cost increases for purchases of goods. We have chosen not to fully compensate for these costs, which is reflected in the gross margin. Overall, the external factors had a substantial negative impact on profit for the quarter. With our long-term approach, we are continuously developing all parts of the company with a focus on meeting customers ever increasing expectations of affordable and sustainable fashion. It’s now more important than ever to continue offering customers the best value for money. Customers should always feel confident that all the Group’s brands provide the best combination of fashion, price, quality and sustainability. We are continuing the integration of our sales channels to offer customers a smooth and inspiring experience in all our touch points. At the same time, we continue with the investments in tech and the digitalization of the supply chain. Efficiency, speed and flexibility have never been more important. In parallel, a program to reduce costs and further improve efficiency is being initiated. From the second half of 2023 onwards, this is expected to free up SEK2 billion per year. With loyal customers all over the world, engaged colleagues and sound finances in combination with the long-term perspective, we see good opportunities to strengthen our position despite the situation in the world around us. The autumn collections have been well received and sales from the 1st to the 27th of September are upward 7% compared to last year. This is an important proof that we can grow also when customers’ purchasing power is decreasing. Thank you very much for listening and we’re now happy to take your questions.
- Operator:
- [Operator Instructions] The first question comes from Fredrik Ivarsson of ABG Sundal Collier.
- Operator:
- The next question is from Nicolas Katsapas of BNP Paribas Exane.
- Operator:
- The next question is Nik -- is from Niklas Ekman of Carnegie.
- Operator:
- The next question is from Daniel Schmidt of Danske Bank.
- Operator:
- The next question is from Richard Chamberlain of RBC.
- Operator:
- The next question is from Simon Irwin of Crédit Suisse.
- Operator:
- The next question is from Adam Cochrane of Deutsche Bank.
- Operator:
- [Operator Instructions] The next question is from Ashley Wallace of Bank of America.
- Operator:
- [Operator Instructions] The next question comes from Rebecca McClellan of Santander.
- Operator:
- The next question is from Andreas Lundberg of SEB.
- Operator:
- [Operator Instructions] Ms. Helena, at this time, there are no questions registered.
- Helena Helmersson:
- Thank you, everyone, so much for participating then. I thank you for all your questions. I wish you all a very nice day.
- Operator:
- Ladies and gentlemen, thank you for joining. The conference is now over and you may disconnect your telephones.