H&M (STO: HM-B) Fourth-Quarter FY 2015 Results: Below Expectations Despite Strong Expansion

Executive Summary

• H&M reported revenue that was up 19%, to SEK180.9 billion (US$21.7 billion) for fiscal year 2015, and revenue that was up 14%, to SEK48.7 billion (US$5.8 billion) for the fourth quarter, but both periods’ results missed consensus estimates.
• Profit after tax was also below consensus; it was up 5% for fiscal year 2015, but down 11% for the fourth quarter.
• The company reported earnings per share of SEK12.63 (US$1.51) for the full year, an increase of 5% versus the prior year, but below the consensus estimate.
• The strong US dollar affected profitability during the fiscal year by increasing purchasing costs, while unseasonably warm weather in November affected sales in H&M’s core markets.
• Store and online expansion contributed to sales growth in a number of markets during the fiscal year, and the company plans continued expansion during fiscal year 2016a