H&M's Sales Accelerate but Profits Still Impacted by Investments; Fair Value Estimate Maintained
We are maintaining our fair value estimate of SEK 153 per share for H&M as the company reported a slight decline in operating profit in the second quarter. Although revenue increased by 11% in SEK and 6% in local currencies, margins remained under pressure. Gross margin declined to 55.4% from 56.1% a year ago, despite reduction of markdown costs in the quarter by 1 percentage point, negatively impacted by a strengthening USD (major sourcing currency) and H&M’s investments in customer qua...H & M Hennes & Mauritz is engaged in the sale of clothing and cosmetics in Sweden and internationally. Co.'s stores offer basics, tailored classics, sportswear, and maternity clothes for women; basics, leisurewear, and seasonal fashions for men; denim and street fashions; and fashion wear for children and teenagers, as well as accessories, underwear, and shoes. Co. also provides makeup and body care products; and home fashion products, which include interior textiles for the bedroom, bathroom, living room, and kitchen. Co. has approximately 3,132 stores, including 110 franchise stores, 85 COS stores, 79 Monki stores, 21 Weekday stores, 8 & Other Stories stores and 3 Cheap Monday stores.
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