H&M seems to profit from its online business and pays high dividends

H&M seems to profit from its online business and pays high dividends

den 13 december 2017

Swedish fashion company Hennes & Mauritz seems to profit from its online strategy. H&M keeps paying high and stable dividends. On top, good news come from India.

In 2017 H&M will open about 475 new physical stores primarily focused on growth markets. With the opening of online stores in many countries H&M wants to profit from a booming e-commerce trend (research online - purchase online). In 2018 H&M plans to expand its online stores to further countries like the huge market in India, Uruguay and Ukraine.

In all markets with physical stores H&M plans to offer online stores as well. On top, H&M diversifies its portfolio with H&M Home (home accessory), ARKET (luxury shopping with integrated café) and newer brands.

 

Strong expansion with on- and offline stores

In spring 2017 H&M opened online stores in Turkey, Taiwan, Hong Kong, Macau, Singapore and Malaysia. In late 2017 online stores in Cyprus and Philippines are about to open. Physical stores were opened in Kazakhstan, Colombia, Vietnam and Iceland. H&Ms growth target is to increase sales in local currencies by 10 to 15 percent per year.

H&M is a Swedish fashion company producing and selling retail fashion. The company has online and physical stores all over the world and distributes its multiple brands in a consolidated H&M store.

H&M reports stable revenue growth in the first three quarters 2017

H&M reported a revenue of SEK 171.29 billion in the first three quarters which was an increase of 7 percent year-over-year (including VAT). Gross profit was reported with SEK 80.16 billion which equaled a margin of 53.6 percent. Profit for the period of the first three quarters in 2017 equaled SEK 12.19 billion and earnings per share (EPS) SEK 7.37. On December 15 H&M reported that the group’s sales development decreased by 4 percent in the fourth quarter 2017. It was the “biggest drop in quarterly sales in at least a decade as fewer customers visited it’s flagship brand’s locations“, says Bloomberg News. After the press release the stock decreased and H&M Chairman Persson bought stocks of the company with a value of USD 407 million. Nevertheless the future development remains to be seen. According to a Bloomberg report, “investors were quick to show their disappointment, with one key shareholder calling for a management shakeup.”

At the moment H&M shares are traded at SEK 199.40 (12.12.2017). The stock reached its annual high at SEK 241.99 (02.01.2017) and its low at SEK 188.90 (23.11.2017). Bloomberg analysts estimate a dividend yield of 4.86 percent. The twelve-month target price is estimated with SEK 201.78. H&Ms current market capitalization equals SEK 330 billion.

The future share performance will depend on various corporate-, industry- and economic factors. Investors should consider the risks before taking any investment decisions. The performance of the underlying might differ from investors’ expectations and lead to a potential capital loss

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2019-12-12 17:40:18

 

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