H&M's Self-Help Initiatives Should Yield Results, but Competitive Landscape Remains Tough
We maintain our no-moat rating and SEK 147 fair value estimate for Hennes & Mauritz as the company reported full-year revenue in line with our expectations but an operating margin of 7.4% versus our forecast of 8.3%. This was driven by a lower-than-expected gross margin--52.7% for the full year versus our 53% forecast--and higher operating expenses in relation to sales at 45.3% versus the 44.7% we expected. Operating costs included items related to logistics systems replacement and related d...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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