Annual report 1996 in English (2.93 Mb) - About H&M

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Report of the Managing DirectorNineteen ninety-six was a very good year for H&M, even though the retail tradeon the whole was extremely sluggish. We expanded dramatically, opening 59new stores and making Luxembourg the 10th country on the map.We aim to offer the absolute latest fashions at the lowest price for comparableproducts. The majority of European consumers – especially families withchildren – saw their purchasing power decline in 1996.That is why we decided to reduce our prices, which made the differencebetween our prices and those of our competitors even greater. Lowering ourprices boosted sales by 28 per cent in comparable currencies. Despite lowerprices, earnings rose 44 per cent over the past year. We avoided costly pricereductions and sold more goods at regular prices than the year before.The financial strength and market expertise of the Group were critical inaccomplishing this. H&M has always placed priority on good liquidity. We have expanded usingour own funds, and we have always been able to consider our moves without having to takeexternal factors, such as borrowing or managing our own real estate, into account. On the otherhand, we are working in a highly competitive market, something which has been underscored bythe many bankruptcies that have taken place in recent years. Our financial strength providessecurity for shareholders and employees.Dramatic expansionOperations expanded dramatically during the year, and we increased our market share considerablyin every country. Our English operation, which has experienced a few problems in the past,is now performing satisfactorily. Our mail-order operation, which has been hampered by lowprofitability in recent years, also developed positively. The same is true for our new Finnish mailorderoperation.The mail-order operation is successful, among other reasons, because we achieved greatersynergies by coordinating buying activities with our stores to a much greater extent than before,which is no easy task given the different selling periods involved. The fact that we published severalcatalogues that did not rely heavily on seasonal sales also contributed greatly to our success.Focus on qualityWhen it comes to price, fashion and a feeling for trends, H&M has made tremendous progress.We are currently focusing on improving the quality of our goods even further. Comprehensivequality controls and close co-operation with our suppliers have enabled us to boost quality stepby-step.Our goal is to provide better service and better quality without raising prices.Quality is aIso a question of in-store service, well designed changing rooms, informationabout our clothing and well-planned displays. In 1996 we worked to improve these areas, andwe will continue to do so in 1997.Environment growing in importanceEthics and the environment are two areas that are growing in importance for us. We do not manufactureourselves nor do we own any factories, but the fact that we are a major buyer gives usconsiderable influence. Moreover, with numerous co-workers on site in other countries, we areable to follow up and check things on a regular basis. We do not intend to rest on our laurels,
however. We comply with the most stringent requirements for control and limits, no matterwhether they apply to the country in question or not.Child labour is another issue that continues to attract attention. Consequently, we wouldlike to emphasize the fact that we never work with a company that uses child labour. We willcancel any contract with a supplier that does.Few levels between customers and managementH&M’s success is based on a high degree of decentralised decision-making and very strong centralmanagement. We have a flat organisation with very few levels between customers and management.This helps us avoid bureaucracy and retain flexibility. Therefore, it is essential that weall adhere to the same philosophy. H&M has a total of 15,000 employees. Each year we employmore than 2,000 people, and it is important to spread the H&M spirit to them.We always strive to recruit internally when new positions become available. The H&M corporateculture encourages employees to take initiatives. While this places great demands on ouremployees, it also provides tremendous opportunities for personal development.Focusing on costs is another important aspect of our corporate culture. This applies to allareas of our organisation. Every krona that we spend affects our prices and our business concept.New countriesIn l997, we will begin operating in FinIand for the first tirne. France will be next in line. All inall, we plan to open more than 50 new stores.We have reached the limit for traditional expansion in Sweden and have begun to focus ondeveloping and changing existing stores. We are becoming more and more specialised. We planto test several different sales concepts in Sweden and other countries with mature markets.Wlth more than 100 stores and sales exceeding SEK 5 billion, Germany remains our largestmarket, and there is still considerable potential. During the year we opened an additional 20stores in Germany and some 25 more are planned for 1997.We are often asked when H&M will open stores outside Europe. At the moment we have noconcrete such plans. But Asia, the U.S. or Eastern Europe could be in the cards in future. We aremonitoring the new Eastern European markets closely, but in our industry, being first in a marketis not everything. Customer loyalty is. And loyalty is not won by being first. It is won by being best.50 years of continuous changeFifty years have passed since H&M opened its first store. Since then, we have continued tochange and review what we have learned and implemented.We usually do not have time to stop and reflect on the past, but we can definitely look backon the past 50 years with pride and happiness.Hennes & Mauritz is moving forward with great enthusiasm and optimism. We have a strongfinancial base. and there are many markets to canvas. We believe that no one should have tochoose between price and quality, between price and fashion, between price and service.With H&M you can have it all.Stefan Persson
Page 1 and 2: Annual Report 1996
Page 3: Financial highlights1996 1995Gross
Page 9 and 10: year-end. The debt/equity ratio was
Page 11 and 12: magnitude along with a twofold incr
Page 14 and 15: Administration reportThe Board of D
Page 16 and 17: Group balance sheet (SEK M, Note 1)
Page 18 and 19: Group cash flow statement (SEK M)95
Page 20 and 21: Parent Company balance sheet (SEK M
Page 22 and 23: Parent Company cash flow statement
Page 24 and 25: 10 Shares and participationsSubsidi
Page 26 and 27: Five-year summary1991/92 1992/93 19
Page 28 and 29: The Board of DirectorsSten Wikander
Page 30 and 31: H&M factsSwedenEstablished: 1947Tur
Page 32: PRODUCTION AND PROJECT MANAGEMENT:

Annual report 1996 in English (2.93 Mb) - About H&M

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