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H&M (HMBSS; NR/ BBB) 1H24 Results (6m to May)

CONSUMER CYCLICALS

We wouldn't read into equity moves; double-digit swings on earnings are normal and it's reversing recent gains (back to May levels). 29/31s are +3/+6 this morning...H&M is the tightest in BBB retailers (in-line with Pandora) hence not much motivation to fight this morning's weakness from us but we would note apparel's discount to broader consumer leaves even tightest looking cheap for ratings. Cheap view on the sector remains on PVH29s. Will follow up post-earnings call.


  • BS looks fine (net 1.3x vs. target 1-2x unch), 1H headline sales are running flat on a constant currency basis (better than expectations for -0.7%).
  • Miss on 1H operating income (SEK9.2b vs. 9.4b) at a margin of 8.1%, but its kept it's FY 10% operating margin target unch.
  • Expect analyst to doubt that even more now with consensus at 8.6%. Company added "our goal of an operating margin of 10 percent for full-year 2024 remains in place. However, the conditions for achieving that level this year have become more challenging".
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