H&M History

In 1947 Erling Persson opened a womens clothing store in Vsters,

Sweden called Hennes. Persson then expanded into Stockholm, Sweden
in 1957. Mauritz Widforss an equipment store for hunting and fishing
supplies, was then acquired in 1968. After obtaining Mauritz Widforss, the
stores were renamed Hennes & Mauritz. This lead to the expansion into
mens garments and childrens wear.
Throughout the 1970s and 1980s H&M continued to expand across
Europe. Impulse stores were launched and the sales of cosmetics. During
the 1980s H&M acquired Rowells mail order company, after which it
started selling clothing through catalogues. Online shopping was launched
in 1998, giving customer easier access to obtain merchandise from H&M.
In the 2000s H&M was able to expand to the United States, Spain, Asian
and Middle Eastern countries.

H&M Operations
H&M headquarters is located in Stockholm, Sweden. H&M outsources its
manufacturing as they do not own a production factory. They manufacture
80% of their product in advance and the other 20% is created based on
the current fashion trend. H&M utilise seven hundred (700) partners
companies in twenty (20) countries over for the production of their
garments. About 60% of production takes place in Asia and the remaining
in Europe.
H&M operates over four thousand (4,000) stores in 62 markets. These
markets are:

The
The
The
The
The

African Market
Asian Pacific Market
Middle Eastern Market
North and South American Market
European Market

In the future H&M plans to continue expansion into other countries New
Zealand, Cyprus, Colombia and Puerto Rico. They also plan to offer ecommerce in thirty-four (34) existing markets.
H&M operated in a monopolistic market. The competitors of H&M are:

Forever 21
Zara
The Gap Inc.
TopShop

H&M Events Analysis

2015 Events
Revenue

Sales increased with the launched 413 stores in several new and existing
markets, which resulted in high sales. Ten (10) online stores were also
launched in other markets as well, this also contributed to increased sales.
During the fourth quarter in the European and the North American Market
throughout the month of November sale of winter garments were low as a
result of warm weather for the winter season.
Assets
Stock during the fourth quarter had a high volume at the end of financial
year due as a result of the low sales of winter garments in European and
the North American markets, as a result of warm weather.
Market Share
There was an increase in market share due to the continued expansion
into new markets of Indian, South Africa, Peru and Macao.

2014 Events
3

Revenue
Sales increased due to continued expansion by launching 379 stores.
They also started 5 new online stores in France, Italy, Spain and China.
Assets
Stock increased due to expansion into new markets and online store.
Market Share
There was an increased in market share due to the continued expansion
into new markets.
Equity

2013 Events
4

Revenue
Sales increased by 9 percent during the financial year, however sales in
the comparable units remained unchanged. Sales also increased due to
expansion into new markets, along with the launch of 356 stores.
Assets
Macroeconomic caused markdown in stock however this did not affect
sales.

2012 Events
5

Revenue
Sales increased by 11 percent in local currencies and I% percent in
comparable units. Sales were strongest in the US, Canada, China and
Russia. Within the new markets of Bulgaria, Latvia, Malaysia, Thailand and
Mexico sales also added to the increase in revenue. Low sales continue in
southern Europe due to the European Debt Crisis in Greece, Italy, Portugal
and Spain.
Assets
The stock volume was higher than that of 2011 due to low sales in Europe
due to the European Debt Crisis.
Market Share
There was an increase in market price increase due to strong customer
offerings in fashion and quality at the best price.
Equity
The profit for the year represents a return on equity of 38.4 percent (35.8)
and a return on capital employed of 50.3 percent (47.1).

2011 Events
Revenue
The European debt crisis decreased sales in southern European countries

like Greece, Italy, Spain and Portugal. H&M had a profitable year with
strong sales, despite the bad Marco-economics climate in many of the
markets. There was intense competition among other competitor within
the market due to the negative effects on the market.
Assets
The stock increased by 20 percent compared to the same time the
previous year and amounted to SEK 13,819 m (11,487). The stock
increase is mainly explained by the expansion and higher purchasing
costs, but also by the warm autumns effect on sales of winter garments.
Market Share
There was an increase in market share continued to gain in a tough
economy.

Profitability
Gross Profit Ratio
1. Identify the trend. Example how it increases or decrease
2. Explain the trend. Mention the trend/event (recall, expansion,)
3. Explain the cause of the event. (example a recall, a part needed to
be changed.
Net Profit (NO Definition)
1. Identify the trend. Example how it increases or decrease
2. Explain the trend. Mention the trend/event (recall, expansion,)
3. Explain the cause of the event. (example a recall, a part needed to
be changed
ROCE1. Identify the trend. Example how it increases or decrease
2. Explain the trend. Mention the trend/event (recall, expansion,)
3. Explain the cause of the event. (example a recall, a part needed to
be changed

Liquidity- Use notes from (Cash flow statement Investing Activates,

Current Ratio
1. Identify the trend. Example how it increases or decrease
2. Explain the trend. Mention the trend/event (recall, expansion,)
3. Explain the cause of the event. (example a recall, a part needed to
be changed
Acid Test
1. Identify the trend. Example how it increases or decrease
2. Explain the trend. Mention the trend/event (recall, expansion,)
3. Explain the cause of the event. (example a recall, a part needed to
be changed

Efficiency

Debtor Days
Creditor Days
Inventory days

Gearing Ratio
Interest Cover