Higher costs and negative special effects weighed heavily on the earnings of the Swedish clothing group Hennes & Mauritz AB (H&M) in the 2021/22 financial year. Despite a strong increase in sales, the profit was not even half as high as in the previous year. That’s according to an annual report released on Friday by the parent company of brands including H&M, Cos, Monki, Weekday, & Other Stories and Arket.
Higher costs and one-off charges are depressing the result
The group had already announced in December that it was able to achieve sales of 223.6 billion Swedish crowns (20.0 billion euros) in the financial year ended November. Compared to 2020/21, this means an increase of twelve percent (currency-adjusted +6 percent).
In addition to special effects, higher freight and material costs and discounts weighed on the gross margin, which fell from 52.8 to 50.7 percent compared to the previous year. At the same time, higher selling expenses and the one-off costs of the ongoing reform program weighed on the result. The operating profit shrank by 53 percent to 7.17 billion Swedish crowns. Net profit was 3.57 billion Swedish kronor (318 million euros), down 68 percent from the previous year.
CEO Helena Helmersson sees development “in the right direction”
For the current year, CEO Helena Helmersson was cautiously optimistic: “The external factors are still challenging, but are developing in the right direction,” she said in a statement. A decrease in cost pressure is to be expected in the course of the year. In addition, the positive effects of the savings measures implemented would materialize in the second half of the year. According to Helmersson, the aim is still to close the entire financial year with a double-digit operating margin.
She also emphasized that the new year had “started well”. In the period from December 1 to January 25, sales in the respective local currencies were five percent above the corresponding level of the previous year.