Operating profit during the second quarter of the company's split fiscal year came in at SEK 5.9 billion, unchanged compared to the same period last year.
The result was worse than expected. Sales were also lower than last year, according to Bloomberg's compilation of stock analysts' forecasts.
The result is burdened by one-time costs of SEK 679 million related to severance pay in connection with workforce reductions.
Withdrawing notice
Earlier in June, the company announced that it was laying off just over 100 employees at the Stockholm office.
That notice has been withdrawn; we have now reached individual agreements with our employees. We are making a provision for future costs, primarily severance pay, says Ervér.
The provision does not only apply to Sweden.
Part of the change affects Stockholm, and that is what the notice was related to, but it also affects other parts of the world.
Excluding one-time costs, profit increased by 11 percent. Profitability also rose during the period. The gross margin rose to 56.6 percent compared to 55.4 percent a year earlier, according to the report.
Material prices weigh on results
The direct impact of the Iran war on H&M's sales is "fairly small," says Daniel Ervér.
Then we get knock-on effects. When the price of oil goes up, freight prices and polyester prices go up. Our biggest material is cotton, but we have seen that the price increase for polyester has spilled over to cotton.
Has the situation improved?
I want to be careful about speculating, but right now it feels somewhat positive that there is starting to be a little more traffic through the Strait of Hormuz.
Turnover for the period came to SEK 54.8 billion, compared to SEK 56.7 billion last year.
The stock previously fell 4.5 percent on the Stockholm Stock Exchange, but recovered and closed down 0.6 percent.
