H & M Hennes & Mauritz AB (publ)

Good day and thank you for standing by. Welcome to the three-month report for 2022. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question and answer session, at which time, if you wish to ask a question, you will need to press star 1 on your telephone and wait for your name to be announced. If you require any further assistance, please press star and 0. Please be advised today's conference is being recorded. I'd now like to hand the call over to your speaker today, Nils Vignier, Head of Investor Relations, please go ahead.

Thank you, and hi, everyone. Thank you all for joining us today, and welcome to this telephone conference about H&M Group's first quarter results 2022. With me today is our CEO, Helena Helmersson, and our CFO, Adam Karlsson. We will start with a short summary of the first quarter, and after that, we will be happy to answer your questions. You'll find the three-month report on hmgroup.com Investor Relations. So, I'll hand it over to you, Helena.

Thank you, Nils. I would like to start by saying that we are deeply concerned about the war in Ukraine and sympathize with all those affected. We closed our stores in Ukraine for the safety of our colleagues. and since the beginning of March, all sales have also been paused in Russia and Belarus. H&M Group, H&M Foundation, and the Erling Persson Foundation have so far donated around 170 million Swedish crowns, as well as clothes and other necessities to organizations including UNHCR, Save the Children, the Red Cross, and UNICEF. The H&M Group cares about all our colleagues and stands with all those around the world who are calling for peace. If we then look at the first quarter, we ended last year with sales back on pre-COVID levels and with a strong financial position. We began the year with increased growth-related initiatives to create an even better foundation for long-term growth. The initiatives mainly involve continuing to develop the customer experience by further broadening the assortment and integrating the sales channels, and by continuing to invest in infrastructure such as tech and the supply chain, but also in renewable energy and sustainable materials. In addition to the general consequences of the pandemic, such as disruptions and delays in the supply chain, some of our major markets were impacted by a new wave of the pandemic in the first quarter. Despite this, we saw a recovery of sales in physical store compared with last year, while online sales continued to perform well. shows the value of having both physical and digital channels which strengthen and complement each other. Well-received collections led to full-price sales continuing to increase, which led to more than expected decrease of markdowns. We are taking further steps towards offering customers more sustainable products. H&M Group has a long history of working with sustainability and it has been an integral part of our business for many years. To acknowledge this even further, we are integrating our annual and sustainability report, which is launched today. Some of the sustainability links highlights are that we have tripled the share of recycled materials used in our garments. We have strengthened our climate goals, committing to achieving net zero by 2040 and reducing our absolute emissions by 56% by 2030. And we have launched our innovative circular design tool, Circulator, underlining our ambition to have all our products designed for circularity by 2025. Looking at current trading, we are, of course, impacted by the consequences of the war in Ukraine, but also by continued effects by the pandemic. Sales from 1st to 28th of March were up 6% compared with last year. And adjusted for the closed markets, sales were up 11%. The group's plans remain intact apart from the consequences related to the paused sales in Russia, Belarus and Ukraine. We have proven that we can be flexible and act quickly as circumstances change. Value for money is more important than ever and we are well positioned to meet customers' continued increasing demand for affordable and sustainable fashion. Thank you so much for listening and we are now ready to take your questions.