The H&M Group’s net sales have increased by 20% in the first half-year to SEK €9.6bn, with gross profits rising 52% to €5.4bn. Well-received collections led to a higher share of full-price sales and lower costs for markdowns, says the company.
Operating profit increased to €509m, corresponding to an operating margin of 5.3%. For rolling 12 months the operating margin was 8.3%.
Sales in the month of June 2022, however, are expected to decrease by 6% in local currencies compared with June 2021. The paused sales in Russia, Belarus and Ukraine represent 5 percentage points of the decrease. The company says that the June figure should be seen in the light of a very strong comparison base in June 2021, an increase by 24%, while July and August increased by 6%.
H&M is also accelerating its expansion in Latin America, with a large number of leases have been signed for new stores, which should also impact financials.
Helena Helmersson, CEO, comments: “Well-received collections have led to strong development, with a further increase in full-price sales and decrease in markdowns. Sales in physical stores increased substantially while online continues to do well. This once again shows the value of having both physical and digital channels which strengthen and complement each other. The integration of the sales channels is therefore ongoing, in parallel with continual initiatives – in particular within tech, the supply chain and sustainability.
“Although most of the restrictions associated with the Covid-19 pandemic essentially seem to be over, many challenges remain. Disruption and delays still exist in the supply chain, but are gradually being eased. At the same time, there is substantial inflation. The situation associated with the war in Ukraine and its consequences for our business are continually being evaluated. We are actively looking at various options to find solutions that give consideration to customers and colleagues as well as the impact on the business as a whole.
“To navigate in a rapidly changing world it is more important than ever to be flexible and able to take quick decisions. As a direct consequence of the challenges in the world around us we are carrying out extensive work to prioritise initiatives, redistribute resources and ensure continued good profitability. We have a well-positioned customer offering and are fully focused on meeting customers’ ever-increasing expectations. Despite the significant inflation in the world, customers must always feel confident that with all the H&M group’s brands they will find the best combination of fashion, price, quality and sustainability. With a strong customer focus, committed colleagues and a robust financial position we see good opportunities for profitable, long-term and sustainable growth.”
Google Cloud backbone for the future
As part of Helmersson’s commitment to both sustainability and to growth, H&M has partnered with Google Cloud to help the Swedish multinational leverage Google Cloud’s extensive data analytics capabilities and secure, sustainable global infrastructure to further enhance its customer experience and supply chain enablement.
Google Cloud will collaborate with H&M Group to develop an enterprise data backbone including a core data platform, data product, and advanced artificial intelligence (AI) and machine learning (ML) capabilities. This will also include the establishment of a new data mesh to further make all types of data and events accessible from multiple sources including in-store, online, its brands ecosystem and suppliers.
As the partnership develops, this will translate to increased optimisation of internal supply chains, as well as next-generation customer experiences across a variety of sales channels, from physical stores to ecommerce. What’s more, this partnership will enable further development of data science and AI capabilities throughout H&M Group’s business.
“H&M Group has a long history of innovation across all our brands and always wants to build meaningful relationships with our customers. We are now further accelerating digitalisation as we believe in sustainable growth powered by advanced analytics and tech. Therefore, I’m happy to announce we’ve found a provider who matches our needs,” says Alan Boehme, Chief Technology Officer, H&M Group.
“We’re delighted to announce this partnership, and look forward to working with H&M Group to create new and exciting customer experiences, whether that’s in-store or online,” concludes Eva Fors, Managing Director Google Cloud Nordic Region. “We admire H&M Group’s commitment to innovation and are excited to move forward in our journey together.”