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1 H & M Hennes & Mauritz AB PRESS CONFERENCE 31 JANUARY 2018 FULL-YEAR REPORT 2017 KARL-JOHAN PERSSON CEO NILS VINGE INVESTOR RELATIONS

QT XX F@! T @ ¼ º 5 @c Tu » ¹ º Á · Microsoft PowerPoint - ENG printfil Q4 2017 Author: maakr Created Date: 1/31/2018 7:44:29 AM

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Page 1: QT XX F@! T @ ¼ º 5 @c Tu » ¹ º Á · Microsoft PowerPoint - ENG printfil Q4 2017 Author: maakr Created Date: 1/31/2018 7:44:29 AM

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H & M Hennes & Mauritz AB

PRESS CONFERENCE 31 JANUARY 2018FULL-YEAR REPORT 2017

• KARL-JOHAN PERSSON CEO

• NILS VINGEINVESTOR RELATIONS

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• Fashion retail – a large and growing market

• Digitalisation driving rapid change

– challenges and opportunities

• New competitive landscape

• Changing customer behaviour

– online shopping growing fast, mobile is central

– reduced traffic to physical stores

• Customer expectations increasing fast

RAPIDLY CHANGING INDUSTRY

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• Sales including VAT +4% to SEK 232 billion; +3% in local currencies

• H&M group online sales developed well

• The newer brands of the group developed well

• Successful launch of ARKET in August 2017

• H&M physical store sales affected by new customer behaviour with reduced traffic to stores

• Profit after financial items SEK 21 billion

2017 IN BRIEF

SALES

61,098

222,865

58,481

231,771

- 4%

+ 4%

0

50,000

100,000

150,000

200,000

250,000

Q4 Full year

SEK m incl VAT

2016

2017

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GROSS PROFIT AND GROSS MARGIN

2016

2017

30,027 27,929

106,177 108,090

57.0% 55.4%

55.2% 54.0%

0

20,000

40,000

60,000

80,000

100,000

120,000

Gross profit SEK m

Q4 Full year

SELLING AND ADMINISTRATIVE EXPENSES

22,673

82,354

23,108

87,521

+ 2%

+ 6%

0

20,000

40,000

60,000

80,000

100,000

Q4 Full year

SEK m

2016

2017

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PROFIT AFTER FINANCIAL ITEMS

7,409

24,039

4,873

20,809

- 34%

- 13%

0

5,000

10,000

15,000

20,000

25,000

30,000

Q4 Full year

SEK m

2016

2017

SALES AND PROFITSFOURTH QUARTER

SEK m 2017 2016Net sales 50,407 52,720Gross profit 27,929 30,027

gross margin, % 55.4 57.0Operating profit 4,821 7,354

operating margin, % 9.6 13.9Net financial items 52 55Profit after financial items 4,873 7,409Tax -880 -1,495Profit for the period 3,993 5,914Earnings per share, SEK 2.41 3.57

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SALES AND PROFITSFULL YEAR

SEK m 2017 2016Net sales 200,004 192,267Gross profit 108,090 106,177

gross margin, % 54.0 55.2Operating profit 20,569 23,823

operating margin, % 10.3 12.4Net financial items 240 216Profit after financial items 20,809 24,039Tax -4,625 -5,403Profit for the period 16,184 18,636Earnings per share, SEK 9.78 11.26

STOCK-IN-TRADE

31,73233,712

+ 6%

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

30 November

SEK m

2016

2017

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KEY DATA

SEK m 30 Nov 2017 30 Nov 2016

Stock-in-trade 33,712 31,732

Cash flow from current operations 21,587 23,775

Investments 12,471 13,346

Cash and cash equivalents and short-term investments

9,718 9,446

Dividend (SEK) 9.75* 9.75

Return on shareholders' equity, % 26.8 31.2

Average number of employees** 123,178 114,586

** converted to full-time positions

* proposed dividend, for more information see the board of directors' dividend proposal in the full-year report for 2017

• Accelerating our transformation in a rapidly changing industry

• Three main action areas

– be restless around the core – our customer offering

– invest in enablers – new technology and ways of working

– drive growth – both traditional and new

THREE MAIN ACTION AREAS

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• Constant improvements of the core –our customer offering

• Improve customer experience in the physical stores

• Optimise the store portfolio

• Strengthen the experience and offering online

• Integration of physical and digital stores

– for a great shopping experience

OUR CUSTOMER OFFERING

• Invest in enablers – new technology and ways of working

• Product development and supply chain

– faster, more flexible and responsive

• Advanced analytics and AI

• Tech foundation

– scalable and stable platforms

– consumer-facing apps and new technologies like Cloud, RFID, 3D

INVEST IN ENABLERS

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DRIVE GROWTH

• Drive growth – expansion with online, stores and digital market places

• Online in 44 H&M markets, of which 8 added in 2017

– Kuwait (Dec 2017), India, Saudi Arabia and United Arab Emirates to open online 2018

• H&M, H&M Home on Tmall in mainland China 2018

• Total of approx. 220 new stores net 2018

– H&M to open in Uruguay and Ukraine

– optimisation of the store portfolio

• We develop and launch new brands

• The H&M group develops new brands

– for new customer needs and new segments

• We have eight unique brands, all scalable

• H&M, COS, Monki, Weekday, & Other Stories,Cheap Monday, ARKET and H&M Home

• In 2018 our ninth brand will open, Afound

NEW BRANDS

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H & M Hennes & Mauritz AB

• Afound, a new market place for off price

• Carefully selected, broad and diverse range of discounted products

– well-known fashion and life style brands for women and men

– external brands as well as H&M group brands

• Afound to open in Sweden in 2018 online and with physical stores

– first store to open in Stockholm

AFOUND

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H & M Hennes & Mauritz AB