H M Hennes Mauritz AB, usually known as HM Group, is a Swedish international clothing company that specializes in fastfashion clothing. HM Group operated in 75 geographical markets as of June 23, 2022, with 4,801 stores under the various corporate brands and 107,375 fulltime equivalent workers. HM is the worlds secondlargest clothing retailer. Erling Persson created the company, and Helena Helmersson is the current CEO.
Contents A Introduction: 3 I Issue of H&M in 2022: 3 II Geographic location 3 III Major business: 4 IV Share price: 4 B Financial 5 I Segmentation analysis 5 1 Product segmentation 5 2 Geographic segment 6 II Ratios 6 1 Profitability ratios .6 2 Return on equity: 7 3 Solvency ratio: 7 4 Efficiency ratio: 8 5 Revenue per employee: .8 6 Competitor analysis: 9 C Human Resource Management 9 I Number of employees, demographic .9 II Culture: 10 III Pay 10 IV Gender pays gap: 11 V Training and development 11 VI Demographics 12 VII Corporate Governance .12 D Marketing 12 I Product 12 II Price 13 III Place 13 IV Promotion 13 V Marketing cost: 13 VI Brand: 14 VII Boston Matrix 14 E Operation 15 1 I Business Model 15 1 Customer segments: 15 2 Value proposition: 15 3 Channels: 15 4 Customer relationship: 16 5 Revenue streams: 16 6 Key resources: 16 7 Key activities: 16 8 Key partnership: .17 9 Cost structure: 17 II Value Chain 17 1 Primary Activities of H&M includes: 18 2 The secondary activities of H&M include: 18 III Integration: 19 1 Business Model: .19 2 Supply Chain: 19 3 Marketing Strategies: 20 4 Technology: 20 5 Sustainability Initiatives: 20 2 A Introduction: H & M Hennes & Mauritz AB, usually known as H&M Group, is a Swedish international clothing company that specializes in fast-fashion clothing H&M Group operated in 75 geographical markets as of June 23, 2022, with 4,801 stores under the various corporate brands and 107,375 full-time equivalent workers H&M is the world's second-largest clothing retailer Erling Persson created the company, and Helena Helmersson is the current CEO.1 I Issue of H&M in 2022: - Because war has broken out in Ukraine, they halt sales in the impacted countries and make donations in support of Ukraine As a result, H&M is ceasing operations in Russia and Belarus - Because of severe inflation, H&M increased freight, raw material, and energy costs - Due to a historically strong USD currency, the cost of purchasing goods climbed significantly - Restructuring charges aided in this reduction.2 Number of stores per region (31 August 2023) II Geographic location 16.80% 25.28% H&M Group brands are offered in markets worl1d3w.99id%e through physical stores and digital means8 9T8h%ey operate around140.,9337%5 locations in 77 markets, with online24s.a02le%s in 60 of them.3 The Nordics Asia, Oceania & Africa StratWeegsitcernbEuusrionpeess uniEtsastern Europe (SBUS’oSut)hern Europe North & South America H&M & Other Stories COS Weekday 1 Annual report 2022 2 Annual report 2022 3 Annual report 2022 3 Monki Arket Afound III Major business4: 5 BRAND PRODUCTS IV Share price: In 2018, the share price of H&M reached 15.39 USD and continue to reach a peak in 2021 with 21.12 USD However, in 2022 it fell dramatically to 11.14 USD.6 B.Financial Financial highlights 2018 – 2022 Revenue has increased by 106% from $20.156B to $21.416B Cash on plus +$969M Profit decreased $870M Average number of employees decreased 86 percent 4 https://hmgroup.com/business-idea/ 5 Annual report 2022 6 : https://www.google.com/finance/quote/HM-B:STO?window=5Y 4 I Segmentation analysis 1 Product segmentation - Demographic: SEGMENTS TARGET Class working class,lower middle class and students Class/ Home between the ages of 15 and 30, still living at home, in student dorms, or in their first home in urban areas Age Between the ages of 15 and 30, ambitious, and with a lot of money Family life Typical college to graduate females' life at home, single, in dorms or in first home, either single or as a young couple without children - Psychographic: H&M use 4C model for customer classification This company frequently uses psychographic profiling since certain products directly appeal to a specific segment of clients Customers had categorized according to accomplishments and actions.7 2 Geographic segment NET SALES H&M is divided into 3 large regions: Asia and Oceania, 16,000 2019 2020 2021 Europe and Africa, North and 14,000 South America Among the three 12,000 regions, Europe and Africa have 10,000 the highest revenue, always over $12,000 Therefore, we can see 8,000 that people in this area are very 6,000 fond of H&M products 4,000 2,000 2022 0 2018 Asia and Oceania Europe and Africa North and South America 7 5 II Ratios 1 Profitability ratios PROFITABILITY RATIOS 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% 2018 2019 2020 2021 2022 Gross Margin Operating Margin Net Margin - The company's gross margin is quite regular, always keeping at more than 50% every year But in 2020, the rate dropped to 2% The company then went on to grow 2.8% in 2021 but fell 2.1% in 2022 - The company's operating margin was quite high in 2018, 2019, 2021 when it always kept an average of 7.5%, showing that the business has expanded profit margins and controlled operating costs In 2020 and 2022, this rate plummeted by an average of nearly 5% per year - H&M had a fairly steady net margin of 5.8% in the first 2 years, but in 2020, the ratio plummeted by 5.1% and then increased sharply by 4.8% But finally, in 2022, the ratio fell again by 3.9% The company in 2020 and 2022 both struggled in the market as ratios both fell in these two years In 2021, the company was greatly affected by the COVID epidemic, and in 2022, the company abandoned the Russian market and production costs were high 2 Return on equity: - In 2019, the company's ROE increased by 2.6% compared to 2018 However, the ratio plummeted to 21.1% in 2020 and then continued to rise sharply to 19.2% but in 2022, the ratio dropped to 6.4% In 2020, due to the impact of the COVID epidemic, the company suffered a crisis because of inventory, sales dropped seriously, so it had to temporarily close 1 number of stores 2021 has taken off as the company has further tapped into the online sales market 6 2023 is in serious decline as the company exits its its key market and faces high production costs 3 Solvency ratio8: Long-term debt: the index is quite high, reaching an average above $4.5B but bottoming out at the end of 2020 and 2021 H&M continued to issue debt to expand production and the size of the company Shareholder's equity: The company bottomed out at $7.52B in 2021 and bottomed out at $4.30B in 2023 H&M attracted a lot of shareholder capital but started after 2022 reduced its investment capital because of the Russian market exclusion Debt to equity ratio: this ratio bottomed out at 0.15 at the end of 2020, 2021 and on average the remaining time coefficient is greater than 1 Steady increase in over the years This is a high-risk investment for newbies 4 Efficiency ratio:9 CASH FLOW Cash flow: 50 Continuing to use cash for the future, 40 free cash flow increased in the first 4 30 years and plummeted in 2022 Free cash flow increase 20 2019 2020 2021 2022 indicates that the company is 10 experiencing growth Cash flow increased but the 0 2018 Net cash (used in) provided by operating activities share price of these years was 8 https:F//rweewcawsh.mfloawcrotrends.net/stocks/charts/HNNMY/henneqsu-miteaulroitwz-,asbo/dienbvte-esqtouritsys-rhaotiuold 9 buy shares of the company https://www.marketwatch.com/investing/stock/hnnmy/financials/cash-flow - 7 Asset turnover: Decrease by 6A3S%SEfTroTmUR20N1O8V–ER 2022 2.5 The average score is higher 2 than 1 but is decreasing 1.5 The company's asset 1 turnover decreases to the 0.5 purchase of large assets with the aim of expanding 0 201t8he ma2rk01e9t 2020 2021 2022 asset turnover 5 Revenue per employee10: - The average annual revenue of H&M employees is $123,929 per year, higher than the average salary of the fashion industry - H&M has a higher average salary than rival company GAP at $95,714 per year, Zara $94,248 per year The company has the advantage of employee benefits every year 6 Liquidity ratio Current ratio Current ratio: 1.45 The indicators of this indicator 1.4 are all higher than 1 In 2018, the index peaked at 1.4 and gradually 1.35 declined to near 1.15 in 2022 1.3 1.25 The company has 1.15 1.2 sufficient financial 1.1 2019 2020 2021 2022 resources to maintain its 1.05 short-term solvency 1 2018 Earnings and diCluurrteendt raetaiorning per share 7 Investor: Earnings per share11: 1 0.9 0.86 0.85 0.8 0.74 0.79 0.76 0.7 0.64 0.6 0.5 100h.4ttps://www.salaryexplorer.com/average-salary-wage-comparison-united-states-fashion-and-apparel-c229f25 110h.3ttps://companiesmarketcap.com/h-m/eps/ 0.220.21 0.1 0.2 0.10.07 8 0 2019 2020 2021 2022 2018 Earning per share (EPS) Diluted The index was quite high in 2018,2019 at $0.85 but bottomed out in 2020 Then continued to rise sharply the following year and stopped at $0.22 in 2022 Investors should consider and buy stocks as H&M stabilizes in the following years Diluted EPS12: this indicator is only slightly lower than EPS in each year This shows investor confidence in the company If more shares were issued investors would continue to have a high return 8 Competitor analysis13: - As the world's 2nd largest fashion retailer, behind only Spain's Inditex is the parent company of ZARA - Continuously compete for top sales positions with ZARA - ZARA consistently launches 11,000 products with H&M pointing out 2,000 - ZARA's inventory turnover lasts only 6 days, but H&M's lasts 52 days 12 https://www.tradingview.com/symbols/OMXSTO-HM_B/financials-income-statement/earnings-per- share-diluted/ 13 https://thestrategystory.com/blog/hm-competitor-analysis/ 9 Finance conclusion: - Compared to previous years, in 2022 H&M's indicators are lower but are gradually improving - Compared to fast fashion heavyweights like ZARA, H&M has proven its strong adaptability and is increasingly expanding both in person and online - The company's revenue and profit are relatively comparative, indicating that the company has the ability to retain customers by keeping up with trends - Investors should invest in the company as it is on track to return to market leadership - Companies can suffer from profitability if they do not face challenges such as sustainability and taking action - Overall, H&M's financial strength and success indicate a solid foundation for future growth and continued market leadership 10 StrandighopeBlvK sm fw -O ECuc III Pay - Total average salary for H&M employees is around $27,000 to $71,000 depending on their job position 16 2018 2019 2020 2021 2022 Revenue per $209,568.45 $193,274.90 $175,476.11 $190,992.25 $186,475.38 Employee ($) IV Gender pays gap:17 - Employees who are part of the operations (corporate, creative) had the same as each other Average salary: $56k- $115k Average salary: $78k - $127k 16 https://www.glassdoor.com/Salary/H-and-M-Salaries-E11918.htm 17 https://www.payscale.com/research/US/Employer=H%26M_Hennes_%26_Mauritz_Inc./Salary 12 V Training and development18 - Spend 1 year in H&M's brands - Be able to change between different positions to develop new skills - There are 5 specialized programs selected for development: Customer offer, Retail Expansion, Engineering & Product development, BI, Data & Analytics and Fashion Design - Get involved in ongoing projects and work with experts.19 VI Demographics20 Ethnicity Gender White Male Female Hispanic or Latino Black or African America Asian Unknown - Overall, more males than females, however over all spread out from department to department - Wide range of ethnicities, diverse - Compared to rival company Forever 21, women accounted for 71.8% and men accounted for only 28.2% VII Corporate Governance21 - Board of Directors: Responsible for overseeing the company's activities, setting strategic objectives, and ensuring compliance with laws and regulations - Shareholders' Rights: 18 Annual report 19 https://career.hm.com/us-en/leadership-training-program/ 20 https://www.zippia.com/h-m-careers-555740/demographics/ 21 https://hmgroup.com/wp-content/uploads/2023/03/HM-Corporate-governance-report-2022.pdf 13 Have the opportunity to regularly participate in decision-making processes through voting on key matters at general meetings - Code of Conduct: Guides employees and stakeholders on ethical behavior and responsible business practices - Sustainability and Social Responsibility: Set goals to achieve circularity in its business model, reduce environmental impact, and promote fair working conditions throughout its supply chain - Risk Management: Identify, assess, and mitigate potential risks - Transparency and Communication: Disclosing information to its shareholders, stakeholders, and the public - Auditing and Control: Regular audits to ensure compliance with laws, regulations, and internal policies Independent external auditors review the company's financial statements to provide credibility and assurance to stakeholders - Board Committees: Focus on specific areas of governance (audit, remuneration, and sustainability) Defined responsibilities and help in decision-making processes - Executive Compensation: Link executives’ pay with both financial performance and sustainability goals Human resource management: 1 For many years, H&M has retained a relatively high number of employees, showing that the company can attract more people who want to work here 2 The company's operations are diverse and inclusive, ensuring employees from multiple backgrounds are employed and providing equal opportunities for promotion The company invests in training and development programs to improve the skills of employees 3 Employee compensation is ranked higher than the average salary of other companies and higher than that of rival ZARA 4 Overall, H&M's strong HR management and attractive compensation can attract many potential employees to the company, other rival companies can hardly get employees without more reasonable salaries 14 D Marketing22 I Product23 H&M is the Swedish multinational clothing retail company, known for its fashion products for all audiences H&M: The range includes everything from designer collaborations to everyday basics and yoga wear & Other Stories: Women wear: shoes, bags, accessories, beauty, ready to wear COS: Classics and wardrobe essentials for men, women and children The brand had designs inspired by art and technology from across the world Monki: On-trend lifestyle collections for young women Weekday: It makes clothing for young and style aware young adults II Price24 H&M competitors are Zara and Gap, compared to both brands, its products are priced relatively lower - Lower cost of manufacturing and transportation - High quality and lower price to attract youth and hence III Place25 Located in major cities across the globe, about 4135 stores Had online store that customer could choose from the list available products Rental clothing to retain highly profitable customers 22 https://thestrategystory.com/blog/hm-marketing-mix-4ps 23 https://fashioncoached-com.ngontinh24.com/article/h-m-marketing-strategy-marketing-mix-4ps- mba-skool#google_vignette 24 https://fashioncoached-com.ngontinh24.com/article/h-m-marketing-strategy-marketing-mix-4ps- mba-skool#google_vignette 25 Annual report 2022 15 IV Promotion H&M created a multi-channel promotion strategy that included advertising, sales promotion, and internet promotion, allowing the brand to be exposed globally V Marketing cost26: Spend approximately $100 million on advertising in digital, print, and national television Invested in high-end advertising units and advertised on over 250 different media properties VI Brand: 1 & Other Stories: - Market share: Low Dollar value is approximately 12.7 billion U.S dollars27 - Market growth: High Rank 8 in USA, listed to the growing (see footnote 23) - Has potential to experience rapid Rank 56 globally28 growth ZARA ranks 43 global (see footnote 23) 2 Monki - Market share: Low VII Boston Matrix - Market growth: Medium - Moderate market growth potential COS (Collection of style) - Market share: Medium - Market growth: Medium - Steadily growing due to its unique positioning in the market H&M (main brand) Weekday - Market share: High - Market share: Low - Market growth: Low - Market growth: Low - Growth potential is - Face with challenge in expanding its customer base limited 26 https://advertisers.mediaradar.com/hm-advertising-profile#:~:text=H%26M%20is%20part%20of %20H%20%26%20M%20Hennes,in%20the%20last%20year%20across%20multiple%20Media %20formats 27 https://www.statista.com/statistics/980692/brand-value-of-h-and-m-worldwide/ 28 https://www.rankingthebrands.com/Brand-detail.aspx?brandID=36 16 Marketing conclusion 1 H&M has successfully implemented various marketing strategies to become one of the world's leading retailers 2 The company effectively uses a number of marketing channels to create a strong brand image and attract customers 3 One of the company's marketing capabilities is trendy and affordable clothing 4 A wide range of products and regular collection launches have helped H&M maintain customer interest and drive repeat purchases 5 H&M faces fierce competition from competitors in the fast fashion industry such as Forever 21 or ZARA 6 The rise of e-commerce and online shopping has forced H&M to invest in its online presence and ability to remain competitive 17 E Operation I Business Model29 30 1 Customer segments31: Fashion – conscious, teenagers, young adults, families 2 Value proposition: - Fashion and quality at the best price - Unique selling point (USP): fast and frequent delivery of new merchandise to create a sense of novelty and variety for customers - Want to lead the change towards a circular and sustainable fashion industry: scaling innovation, promoting transparency, collaborating with other stakeholders 3 Channels: - Physical stores - Online retail (E-commerce) - Collaborations and special collections 29 https://uploads-ssl.webflow.com/61c11b4eea114eeb2cece931/645c79184d96f539d73439e5_HM.png 30 https://businessmodelanalyst.com/hm-business-model/ 31 Annual report 2022 18 - Mobile apps - Franchise partnerships - Sustainability initiatives - Marketing and social media 4 Customer relationship32: - Developing a multi-channel promotion strategy (advertising, sales promotion, and internet promotion) - Attracts customers by increasing brand awareness and displaying low prices on products while marketing them 5 Revenue streams33: - Retail sales – Physical store - E-commerce sales - Collaborations and Limited editions - Franchise operations - Sustainability initiatives - Accessories and Home goods - Digital and Social media advertising 6 Key resources34: - Supply chain and Production facilities - Product design and Development - Retail stores - Ecommerce platform - Technology and IT infrastructure - Human capital - Brand and reputation - Partnerships and Collaboration - Financial capital - Sustainability initiatives - Market research and Data analysis 7 Key activities: - Designing and developing new products - Sourcing and selecting raw materials and manufacturing partners 32 https://hmgroup.com/our-stories/an-inspiring-customer-experience/ 33 Annual report 34 https://www.termpaperwarehouse.com/essay-on/H-m-Case-Study/67520#:~:text=H%26M%20carry %20out%20its%20goods%20and%20services%20through,through%20media%20to%20attract %20customer%20to%20increase%20demands 19 - Producing and manufacturing H&M products - Marketing and advertising to promote H&M products - Selling products through retail partners and direct-to-consumer channels - Building and maintaining relationships with key partners and stakeholders 8 Key partnership: - Raw material suppliers - Manufacturing partners - Logistics and transportation partners - Retail partners 9 Cost structure: - Raw materials cost for product manufacturing, manufacturing and production costs (labor and equipment, marketing and advertising costs, distribution and logistics costs, R&D) - Focus on sustainability and eco-friendliness led to additional costs and implementing sustainable manufacturing processes II Value Chain35 36 35 https://www.researchgate.net/figure/H-M-overall-supply-network-map_fig4_364618391? fbclid=IwAR2bowWE-EHJkjC9odSkZF6zWyOWN62ypA_9juw6HU6AXtO8rTOeQWeZZgU 36 https://where2sell2.wordpress.com/2016/07/29/hm-value-chain/ 20