Hennes & Mauritz (AO) | Buy | First take on Q2: Adj. EBIT 4% above consensus, June sales flat in LC

研报英文原文证据摘录

Hennes & Mauritz (AO) | Buy | First take on Q2: Adj. EBIT 4% above consensus, June sales flat in LC

l positioned to adapt product flows to changing conditions on the back of

the Middle East conflict. It also expects markdown costs in Q3 to be at the same level as last year, broadly in line with our estimate

(+10bps). On the more cautious side, management said the overall impact of external factors on goods to be sold in Q3E is

expected to be neutral, whereas we had anticipated a positive contribution. In addition, the company noted that supply chain

improvement initiatives are continuing, but the benefits will now be included in the comparative figures.

Summary: Our initial take on the Q2 results is mixed. Adjusted EBIT exceeded expectations, but current trading (June sales)

appears to be slightly softer than expected. The outlook commentary also appears mixed at first glance. We will look to the 9:00

CET conference call for additional colour and clarification.

Sales

Sales of SEK54,828m were c. 0.5% below the Modular Finance consensus. Sales in local currencies were fairly in line with last year

(Modular Finance consensus: c. -0.5% YOY; KECH: 1.0% YOY), with the store count being 3% lower at the end of the quarter compared

with the same period last year.

The negative currency translation impact on sales from the stronger Swedish krona (SEK) was -3% YOY (consensus -c. 2.4%, KECH -4.0%).

Operating profit (EBIT)

Excluding a restructuring charge of SEK679m (not in forecasts), Q2 adjusted EBIT increased by 11% YOY to SEK6,592m and exceeded both

Modular Finance consensus (SEK6,336m) and our SEK6,463m forecast by c. 4% and c. 2% respectively.

Encouragingly, the adjusted EBIT margin expanded by 1.6ppt despite only flat local currency sales growth.