Market cap

* For banks, enterprise value is substituted with market cap. Source: Bloomberg Finance L.P.

Performance of the brand

 The Group’s business consists mainly of sales of clothing, accessories, shoes, cosmetics and home textiles to consumers. H&M’s business concept is to offer fashion and quality at the best price. The business is operated from leased store premises, through e-commerce and catalogue sales. Part of the business functions on a franchise basis. At the end of the financial year 2010, H&M was present in 38 markets, and the operations in nine of these were on a franchise basis. The total number of stores at the end of the financial year was 2,206, of which there were 50 franchise stores, 35 COS stores, 48 Monki stores, 18 Weekday stores and one Cheap Monday store. Internet and catalogue sales are offered in Sweden, Norway, Denmark, Finland, the Netherlands, Germany, Austria and the UK. The home textile business, H&M Home, operates via internet and catalogue sales and also through stores in Stockholm, Helsinki, Copenhagen, London and Amsterdam. Germany represents H&M’s biggest market measured by net sales, followed by the UK and Sweden.

H&M’s sales have increased from SEK118,697 million in FY2009 to SEK126,966 million in FY2010, representing an increase of 7%. The operating profit of H&M was SEK24,659 million in FY2010, an increase of 13.9% over FY2009. Moreover, the fashion retailer opened 218 additional stores in 2010, now totalling 2,206 globally.

Supported by its 7% revenue increase, H&M’s brand value grew by 17.6% to $9,762 million. Yet, the retailer lost its AAA- rating and is now represented with an AA brand rating.

Positive Aspects

Sustainability strategy launched in 2009

H&M’s sustainability strategy involves incorporating sustainability work into day-to-day routines in all areas of the company’s operations. This sustainability strategy was launched in 2009 and was gradually introduced during 2010. It is based on transferring responsibility for environmental and social matters out into each of the Group’s departments from the central Corporate Social Responsibility department, which operates in a support capacity. One area currently in focus is the development of sustainable materials and production methods, such as the use of organic cotton. H&M’s aim is for all cotton used in its product range to come from more sustainable sources by 2020 at latest.

H&M ranked as the number one user of organic cotton worldwide 2010

H&M was the biggest user of organic cotton worldwide last year according to Textile Exchange, a global organisation which aims to promote increase the use of organic cotton and produces the yearly Global Sustainable Textiles Market Report.  The report provides the organic cotton and sustainable textile market with estimates for the preceding year, while identifying trends and market leaders and providing market projections for the year to come. In 2010 H&M used around 15 000 tonnes of organic cotton – a marked increase from previous years.

Negative Aspects

Organic cotton fraud

Despite H&M’s rank as the number one user of organic cotton in 2010, the fashion retailer came under increased pressure after the German edition of the Financial Times has uncovered an alleged organic cotton fraud in 2009. According to Lothar Kruse, a director of the independent testing laboratory Impetus in Bremerhaven, "30% of the tested samples" of organic cotton fabric contained genetically modified (GM) cotton.

H&M clothes shredding scandal 2010

It is already commonly known that many designers destroy their unsold stock as they do not want their brands ending up in discount stores. After a graduate student at the City University of New York found bags of unworn clothing cut up and thrown away by H&M, the retailer promised to stop shredding new clothing it can't sell at its store in Herald Square and instead donate it to charities. However, despite H&M’s promise, PIX News caught an H&M employee from the store at 35th Street trashing bags of what appeared to be brand new shoes and refused to comment on the issue.

21 workers died in a fire at Bangladeshi H&M factory

In its annual report, H&M states that it does not own any factories but instead outsources product manufacturing to around 700 independent suppliers through 16 local production offices in Asia and Europe. H&M claims to work in close cooperation with the suppliers in order to guarantee the quality of the products and that manufacturing takes place under good working conditions. However, in March 2010, The Independent reported a Bangladeshi sweatshop factory supplying H&M caught fire, killing 21 workers who had been working late into the night to fulfil orders. The fire exits had been blocked and the fire extinguishing equipment non-functioning, all the results of poor safety standards.

 

 

Last changed September 9, 2011

League tables

H&M appears in the following brand league tables:

Rank 14 in the Best Retail Brands 2012.
Rank 105 in the Global 500 2012.
Rank 11 in the Best Retail Brands 2011.
Rank 89 in the Global 500 2011.
Rank 89 in the Global 500 2011.
Rank 94 in the Global 500 2010.
Rank 146 in the Global 500 2009.
Rank 161 in the Global 500 2008.
Rank 154 in the Global 250 2007.