H&M (STO: HM-B) FY16 Results: Tough Year, but Better-Than-Expected January Sales

Executive Summary

• Swedish fast-fashion retailer Hennes & Mauritz AB reported SEK192.3 billion in net sales excluding VAT in FY16, slightly below the consensus estimate of SEK192.8 billion and up 6.3% year over year. Net sales including VAT increased by 7% year over year on a constant currency basis. The company did not provide comparable stores sales growth rates.
• Diluted EPS was SEK11.26 for FY16, down 10.9% from SEK12.63 pence in FY16 and above the consensus estimate.
• The company introduced a new growth target to increase group sales by 10%–15% in constant currencies, reflecting the growing impact of the online sales contribution. The company stated that group sales including VAT in the period 1 January to 29 January 2017 increased by 11% year over year in constant currencies, above the consensus estimate of 10% year-over-year sales growth.