H&M (STO: HM-B) 1Q17 Results: Below Target Sales Growth; New Concept To Be Launched in Early Fall 2017

Executive Summary

• Swedish fast-fashion retailer Hennes & Mauritz AB reported SEK47.0 billion in net sales in 1Q17, slightly below the consensus estimate of SEK48.1 billion and up 8.0% year over year. Constant-currency sales increased by 4.0% in the quarter and UK sales increased 5.0%.
• Gross margin expanded by 10 basis points year over year to 52.1%, reversing the trend of gross margin erosion in the past year. EPS was SEK1.48 for 1Q17, down 3.9% year over year and above the consensus estimate of SEK1.39.
• The company stated that group sales including VAT in the period March 1 to March 28, 2017 increased by 7% year over year in constant currencies. H&M is targeting to increase group sales by 10%–15% in constant currencies in FY17. H&M will launch new brand ARKET in early autumn 2017 and open its first H&M Home standalone stores in 2018.