H&M Accounting Analysis Report
Report by Analysts of Group 6.
Investment Recommendation:HOLD (Current stock is fairly priced)
Business Analysis
Overview
The Swedish company Hennes & Mauritz AB is the second largest clothing retailer in the world, just behind Spain-based Inditex (parent company of ZARA). The H&M Group’s business consists mainly of sales of clothing, accessories, footwear, cosmetics and home textiles to consumers. In addition to H&M Home, the group also owns several brands, as shown here, which make the company well-known for its fast-fashion clothing offerings for women, men, teenagers and children.
H&M was established in Västerås, Sweden in 1947 by Erling Persson. In 1974, H&M got its initial public offering (IPO) in Stockholm exchange. It remained a domestic brand until in 1990 domestic market sales were outnumbered by foreign sales. H&M’s principle for expansion is that every store shall have the best commercial location. The company entered U.S and Asian markets in 2000 and 2007 respectively. Now, the company had over 3,000 stores in 53 countries with its primary markets in Germany, the US, France and the UK.
Strategy
During the first 30 years of its existence, the company had a low-end image, and price was the most important element of marketing-mix. The positioning has been changed in 1980’s, when the company started to focus more on improving quality, bringing new designs, advertising and reducing operational costs.
Today the company successfully realizes its business concept, which is “to offer fashion and quality at the best price”. This strategy has been adopted since then, and switching their business concept from offering “low price” to "best price" is reflected on their image and their cost structure, as it will be illustrated in the following sections of this presentation.
It essentially means that H&M is quite design-driven innovative while maintains its quality,
Investment Recommendation:HOLD (Current stock is fairly priced)
Business Analysis
Overview
The Swedish company Hennes & Mauritz AB is the second largest clothing retailer in the world, just behind Spain-based Inditex (parent company of ZARA). The H&M Group’s business consists mainly of sales of clothing, accessories, footwear, cosmetics and home textiles to consumers. In addition to H&M Home, the group also owns several brands, as shown here, which make the company well-known for its fast-fashion clothing offerings for women, men, teenagers and children.
H&M was established in Västerås, Sweden in 1947 by Erling Persson. In 1974, H&M got its initial public offering (IPO) in Stockholm exchange. It remained a domestic brand until in 1990 domestic market sales were outnumbered by foreign sales. H&M’s principle for expansion is that every store shall have the best commercial location. The company entered U.S and Asian markets in 2000 and 2007 respectively. Now, the company had over 3,000 stores in 53 countries with its primary markets in Germany, the US, France and the UK.
Strategy
During the first 30 years of its existence, the company had a low-end image, and price was the most important element of marketing-mix. The positioning has been changed in 1980’s, when the company started to focus more on improving quality, bringing new designs, advertising and reducing operational costs.
Today the company successfully realizes its business concept, which is “to offer fashion and quality at the best price”. This strategy has been adopted since then, and switching their business concept from offering “low price” to "best price" is reflected on their image and their cost structure, as it will be illustrated in the following sections of this presentation.
It essentially means that H&M is quite design-driven innovative while maintains its quality,