H & M Hennes & Mauritz AB (publ)

Hello and welcome to the H&M conference call six-month report for 2022. For the first part of this call, all participants will be in a listen-only mode during the speaker presentation, and afterwards, there will be a question and answer session. If you wish to ask a question, you will need to press 01 on your telephone and wait for your name to be announced. And please be advised that today's conference is being recorded. Today, I'm pleased to present Nils Vinge, Head of Investor Relations, and I'll now hand you over to our speakers. Please begin.

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

Thank you, Nils. H&M Group's strong development continued during the second quarter. Well-received collections led to further increase in full-price sales and decrease in markdowns. The physical store remains much appreciated by our customers with sales increasing substantially during the second quarter while online sales continued to perform well. This once again shows the value of having both physical and digital channels which strengthen and complement each other. We are therefore continuing the integration of our sales channels to offer customers a smooth and inspiring experience. At the same time, we also continue with our store optimization to make sure that we have the right store in the right place. Our customer offering is well positioned and we are fully focused on meeting customers' ever-increasing expectations of affordable and sustainable fashion. When, where and how they choose. As you all know, we started the year by communicating our 2030 goal when we are to double sales while at the same time halving the carbon emissions. Profitability is to exceed 10% over time. To achieve these goals, we focus on three growth areas. First and foremost, H&M, which is one of the world's largest fashion destinations with several billions of visits yearly in-store and online across the world. We are continuing to develop the customer experience by further broadening the assortment and services for H&M. And while doing this, we strengthen our existing relationships with our customers and also attract new ones by offering them unbeatable value with the best combination of fashion, quality and price in a sustainable way. H&M is now accelerating its investment. expansion in region North and South America with focus in Latin America where a large number of leases have been signed for new stores. Our second growth area is portfolio brands and business ventures and during the second quarter we saw a strong sales development especially for COS and other stories and archives. In addition, the majority-owned SELPI, an e-commerce platform for second-hand sales, also continued to perform well with doubled sales in the second quarter. SELPI is available in 24 markets in Europe and is a good example of how we continuously work on developing new circular business models. and how investments in sustainability provide H&M Group with long-term business opportunities. Our third growth area is investments and partnerships. We continue to invest through our investment arm CoLab. And in a short time, these investments have created significant value both financially and also in the existing operations, for example, by improving the customer experience and enabling innovation in sustainable materials. Two companies that we have invested in are RenuCell and Infinited Fiber Company. They are now scaling up. And thanks to our early investments, we have already started using their innovative and sustainable materials in our collections, as well as securing additional access for many years to come. We also continue to invest in other areas, particularly within tech, the supply chain and sustainability. Looking ahead, Most of the restrictions related to the COVID-19 pandemic essentially seems to be over, but there are still many challenges. Disruptions and delays in the supply of goods remain but are gradually mitigated. At the same time, we are seeing substantial inflation. We are deeply concerned about the war in Ukraine and sympathize with all those affected. The consequences for our business are continually being evaluated. We are actively looking at various options to find solutions that give consideration to customers and colleagues as well as the impact on the business as a whole. We have long experienced in dealing with challenges in the global economy and we are currently carrying out extensive work to prioritize initiatives, redistribute resources and to ensure continued good profitability. Now it is more important than ever to be flexible and take quick decisions to navigate in a rapidly changing world. Customers should always feel confident that all the group's brands provide the best combination of fashion, price, quality and sustainability. We see good opportunities for profitable long-term and sustainable growth as we have strong customer focus, fantastic and committed colleagues, close relationships with business partners and a robust financial position. Thank you very much for listening, and we're now happy to take your questions.