H&M Net Profit Fell 21.5% In The First Half Year.

July 1st news, though in recent years

Has been in a radical expansion, but the sales figures are not pretty.

The report shows that the gross profit margin of H&M in the first half of the year was 54.9%, down from 57.4% in the same period last year, and the cost of management and marketing rose all the way in the past four years.

However, H&M CEO Karl-Johan Persson recently released heavy news: online and offline stores are almost the same, the next step is to integrate two sales channels to complement each other.

Net profit fell 21.5% in the first half year.

According to the financial report, the gross profit margin of H&M in the first half of the year was 54.9%, lower than 57.4% of the same period last year, and the profit after tax was 7 billion 902 million kronor, which totaled 4.77 kronor per share, down 21.5% from the same period last year.

During this period, tax related turnover increased by 5%, which was 104 billion 970 million Swedish kronor, rising by 7% in local currency, but significantly lower than the two digit growth rate in the same period last year.

The gross profit in the second quarter was 26 billion 980 million kronor, with a gross margin of 57.6%, down from 59.4% in the same period last year.

The group's net profit of SEK 5 billion 375 million was 3.24 kronor per share, down 16.9% from the same period last year.

CEO Karl-Johan Persson attributed the poor performance to the cold weather in many markets in March and April, the unfavorable dollar, the new discount activities and the impact of long-term investments.

2011-2015 years of marketing and management costs have climbed all the way.

Looking at the H&M earnings report, the weather, exchange rate and promotion are all accidental factors. Long term investment is a pain spot throughout the year. CEO always needs to explain where the money has gone.

Over the past three or four years, H&M's investment figures have been rising.

The results showed that the cost of marketing and management costs increased by 9.5%, 7.5%, 17.8% and 20.1% in the past four years, mainly for offline stores, IT and logistics, and online expansion.

At present, H&M has more than 4000 stores in the world, covering 62.

。

Over the past 5 years, the number of H&M stores has maintained a growth rate of 10~15%, and the total ~2015 in 2011 was 2472, 2776, 3132, 3511 and 3924 respectively.

About 425 new projects are planned this year, with emphasis placed on China and the United States.

In addition to continuing to expand the market, H&M has also been developing new countries such as Puerto Rico and Cyprus.

Next year will increase the 4~5 market, has been identified in Columbia.

Of course, the momentum on the H&M line is also very fierce. In 1998, online shopping was launched, and the expansion in 2006.

In the first half of this year, 9 new online markets, including Japan and Greece, totaled 32.

This year's target covers 34 markets, and will enter Canada and South Korea this fall. The results will continue in 2017.

H&M has always emphasized that online is not just about volume, but also profit.

No clear in earnings report

Sales data, IR director Nils Vinge revealed: "hm.com profit is very high, is our important source of income."

CEO Karl-Johan Persson also expresses recognition to the relevant investment of electric business: "investment in IT and online in recent years has made H&M a lot of money in the field of electricity supplier, and it can continue to expand to more countries."

This year, the investment budget was suddenly cut down.

After several years of triumph, in June this year, H&M lowered its annual investment budget from the previous 13 billion 500 million ~140 billion Swedish kronor to 12 billion 500 million ~130 billion Swedish kronor. Some analysts speculate that this means that the burning of H&M has come to an end.

However, CFO Jyrki Tervonen expressed the hope that the outside world should not be over interpreted: "this is only a financial adjustment in the middle of the year. H&M will still keep the pace of 10%~15% opening, and the investment budget next year may also increase. Of course, we will ensure that it will not exceed the existing overall level."

In response to the challenge of burning money, he responded: "in the past three or four years, H&M's long-term investment has indeed increased rapidly.

But now it can be clearly seen that H&M is beginning to maintain a balance between the ideal business and investment.

In the future, efforts will continue to make investment levels more reasonable. "

In addition, Nils Vinge also revealed that H&M's efforts were beginning to show results.

"We have invested a lot in the Internet before, and now the returns are beginning to show up, so it will not be as radical as it was at the beginning, and it is now in a stage of gradual development."

Obviously, the ambition of H&M is not limited to the number of cloth shops. What it wants to do is brand O2O.

Karl-Johan Persson announced that the number of stores has reached a certain level in the latest earnings report. The goal is to upgrade channels: "the focus of the future is to integrate two sales channels, so that the physical stores and e-commerce providers can complement each other and bring better services to our customers."

As to how to integrate, Jyrki Tervonen explains that H&M is trying a set of online and offline integration solutions, including online ordering, store to pick up (Click&Collect), store online return (online returns in stores) and scan code purchase (Scan&Buy).

Among them, online ordering and picking up goods are still being tested; store online returns have entered 10 countries and are ready for further promotion; scan code purchase has covered all online markets.

In addition, H&M is exploring the means of payment, distribution mode and the last mile solution.

"In some areas, some functions have been on-line, and some are in the testing stage."

{page_break}

How hard is the O2O of branding?

There are more than one international brand to make O2O, and ETAM, GUESS, Levis and so on have indicated in public that they are exploring H&M.

For example, the American fast fashion brand Gap recently launched a ship from store service in China, and the system will automatically select the nearest store or delivery warehouse after a single Tmall flagship store.

In North America, the group has launched four services, including "ship from store", "find store store", "store reservation" (reserve in store) and "store order" (order in in).

Jose Blanco, President of GUESS Greater China, told reporters: "O2O is not only concerned about the single channel of electricity suppliers or entities, but also needs to get through all channels.

Of course, these jobs are easy to say, and they are not really easy to do. Especially, how to seize the next wave of marketing channels is very important.

Many brands are building the whole channel. Once established, they need to think about how to profit from this model and help the brand go to the next level.

According to McKinsey Global partners, in recent two years, brand operators are facing the same problems when implementing O2O: achieving online traffic increase and channel building, but relatively backward in online deliveries and inventory clearance.

"Brand operators should not think too far away from things first. First, online display and sales, offline delivery, return, exchange, stock to get through."

Divination said.