H&M sees growth in online sales lifting earnings this year

A woman shops at an H&M store in New York City. The retailer is seeing a pickup in online sales. (Reuters)
Updated 14 February 2018
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H&M sees growth in online sales lifting earnings this year

STOCKHOLM: Sweden's H&M expects earnings to grow this year as rising online sales offset weakness in its physical stores, it said on Wednesday at its first ever day of investor briefings held to assuage concerns over future strategy.
Shares in the world's second-biggest fashion retailer reacted positively and were up 2.5 percent at 145.22 Swedish crowns by 0727 GMT, compared with a 0.7 percent firmer European retail sector.
The company, a rival globally to Zara-owner Inditex , forecast growth of at least 25 percent in online sales and in its new brands such as COS and H&M Home in 2018, but said sales from its existing stores would continue to fall, noting high stock levels.
H&M has in recent years seen sales growth stall as it struggles to keep up with shoppers moving online, and fend off competition in its core budget segment. Inditex has consistently outperformed its Swedish rival in that time, helped by having a faster and more flexible supply chain and by moving faster into e-commerce.
In a statement ahead of its capital markets day for analysts and investors, H&M said it expected a "somewhat better" result for the 2017/18 financial year.
Analyst John Hernander at Nordea, a top-ten H&M shareholder, said: "The market expects lower earnings for 2018, so if H&M instead delivers on its target of a somewhat higher profit and turns the negative estimate revision trend, the stock will also turn."
Shares in H&M, which is controlled by the Persson family, have slid for three straight years, shedding more than half their value from a record high in March 2015 amid mounting scepticism the company has a viable turnaround plan.
H&M said it expects online sales to reach 75 billion crowns ($9.4 billion) in 2022, up from 29 billion in 2016/17, and new brands to achieve sales of 50 billion in 2022, up from 17 billion in 2016/17.
"Overall, this is expected to lead to good increases in profit," CEO Karl-Johan Persson said.
The group said its online channel accounted for 12.5 percent of total sales in 2016/17, but 22 percent of operating profit.
H&M, which has said it will close some stores in mature markets in regions such as Europe, said it expected newly opened stores to increase sales for the group by between 1 and 3 percent in the 2019 to 2022 period.
It also held out the prospect of additional growth from two "completely new business models" it is working on, without elaborating.
Earlier this week the retailer dropped plans to ask shareholders to reinvest their dividend payout in new H&M shares, saying this would have been too difficult to carry out.
The original proposal, supported by the Persson family, took markets by surprise and played a part in sending the battered stock down to its lowest level since 2008 when announced late last month.


Shareholders of India’s Jet Airways approve debt-for-equity swap

Updated 23 February 2019
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Shareholders of India’s Jet Airways approve debt-for-equity swap

  • The plan will mean the lenders will have a bigger holding than any other shareholder
  • Currently, Chairman Naresh Goyal owns a 51 percent stake in the company and Abu Dhabi’s Etihad Airways owns 24 percent

MUMBAI: India’s Jet Airways said late on Friday that its shareholders approved a plan to convert existing debt to equity, paving the way for the troubled company’s lenders to infuse funds and nominate directors to its board.
Jet’s board last week approved a plan by lenders, led by State Bank of India, for an equity infusion, debt restructuring and the sale or sale-and-lease-back of aircraft.
The plan will mean the lenders will have a bigger holding than any other shareholder.
Currently, Chairman Naresh Goyal owns a 51 percent stake in the company and Abu Dhabi’s Etihad Airways owns 24 percent.
Jet, which had net debt of 72.99 billion rupees ($1.03 billion) as of end-December, has debt payments looming next month, according to rating agency ICRA. It has been unable to pay pilots’ salaries and has outstanding bills to aircraft lessors.
The company, India’s biggest full-service carrier, is struggling with competition from budget rivals, high oil prices and a weaker rupee. The share price took a beating in 2018, losing nearly 70 percent of its value.
In a regulatory filing, Jet said on Friday that 98 percent of its shareholders voted to increase the share capital to 22 billion rupees ($309.8 million) from 2 billion rupees at a special meeting.
Jet, whose financial woes are set against the backdrop of wider aviation industry problems, has been in the red for four straight quarters.