H&M: gross margin surprises, share price jumps

(CercleFinance.com) - On Wednesday Hennes & Mauritz (H&M) reported a stronger-than-expected rise in its Q1 gross margin, as the Swedish group benefited from supply chain improvements and tight cost control.


For the three months to 29 February, operating profit climbed to 2.1bn SEK, compared with 725m SEK a year ago, well above the 1.3bn expected by RBC analysts.

Profit after tax amounted to 1.2bn DRK, compared with 540m SEK a year earlier.

H&M's net sales reached 53.7bn SEK in the quarter, down from 54.9bn SEK in the same period last year.

But its gross margin rose by 4.3%, to 51.5% from 47.2% a year ago, whereas consensus was expecting only a 2.8-point improvement.

Analysts at RBC believe that consensus EPS for FY 2024/2025 should be revised upwards by 5% to 10% following the release of these figures.

We believe that H&M has taken a number of steps to improve its multi-channel offering for consumers, which should enable it to defend its positions in its main markets, the Canadian broker says.

Following the announcement of these results, the share price of the world's number two ready-to-wear company jumped by over 13% on the Stockholm Stock Exchange, and was the biggest winner in the pan-European STOXX Europe 600 index.


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