H&M (HMBSS; NR, BBB) {HMB SS Equity} 1Q24 Results

Healthy results, mgmt noting leverage at lower end of target indic. of sizeable returns for equity holders to continue.

• Revenue beat at SEK53.7b (c53.3b) as did gross margins at 51.5% (c49.7%) driving strong SEK2.1b vs. c1.3b beat on operating profit.
• Sales (constant currency) were strong in eastern Europe (+8%yoy) while all other regions were flat to down - Western Europe was -4% & North & South America together were down -7% - net -2% fall for the group was still above consensus -3.3%.
• Operating cash flows were just shy of SEK4b, inventory was down 7%yoy contributing to 3.2b decrease in working capital yoy. Net cash flows over qtr were -5.4b driven by 2.8b paydown in liabilities & 1.8b in share repurchases.
• Leverage (incl. lease liabilities) was at 1.4* (it targets 1.0-2.0* & notes at lower range), cash & eqv's on BS was SEK21b.
• Proposed dividend is SEK 6.5/share (~9.5b) in two instalments and in line with recent years, not much on share buybacks outside noting it repurchased SEK3b worth from late September to early March.