H & M Hennes & Mauritz AB Nine-month report

Nine months (1 December 2015 — 31 August 2016)

  · The H&M group’s sales including VAT increased by 7 percent in local
currencies during the first nine months of the financial year. Converted into
SEK, sales including VAT increased by 5 percent to SEK 161,767 m (153,444).
Sales excluding VAT amounted to SEK 139,547 m (132,167).
  · Profit after financial items amounted to SEK 16,630 m (20,094). The group’s
profit after tax amounted to SEK 12,722 m (15,372), corresponding to SEK 7.69
(9.29) per share.

Third quarter (1 June 2016 — 31 August 2016)

  · The H&M group’s sales including VAT increased by 8 percent in local
currencies during the third quarter. Converted into SEK, sales including VAT
increased by 6 percent to SEK 56,802 m (53,420). Sales excluding VAT amounted to
SEK 48,982 m (46,024).
  · Gross profit amounted to SEK 26,471 m (25,712). This corresponds to a gross
margin of 54.0 percent (55.9).
  · Profit after financial items amounted to SEK 6,301 m (6,936). The group’s
profit after tax amounted to SEK 4,820 m (5,306), corresponding to SEK 2.91
(3.21) per share. Profits in the third quarter were negatively affected mostly
by increased mark-downs but also due to higher purchasing costs from the
strengthened US dollar.

  · H&M’s e-commerce will be launched in Canada and South Korea during autumn
2016. A total of 11 new H&M online markets will thus be added in 2016, which
means that H&M will offer e-commerce in 35 markets by the end of the year.
  · The H&M group’s sales including VAT in September 2016 are expected to
increase by 1 percent in local currencies compared to the same month last year.
The exceptionally warm weather in September delayed the start of the autumn
season.
  · The H&M group plans a net addition of around 425 new stores and three new
markets for the 2015/2016 financial year. In addition to Puerto Rico which
opened this June, and Cyprus, which opened in September, New Zealand will open
its first H&M store in October.
  · In 2017, H&M plans to open stores in four to five new markets including
Colombia, Iceland and Kazakhstan.
  · A continued fast roll-out of new H&M online markets is planned for 2017.
  · The H&M group plans to launch one or two new brands in 2017.

Comments by Karl-Johan Persson, CEO
“Sales including VAT in the third quarter increased by 8 percent in local
currencies. Converted into SEK, sales increased by 6 percent to around SEK 57
billion. Sales were good in most of the markets up until mid-August. Thereafter
sales were negatively affected by unseasonably hot weather which continued into
September, resulting in a challenging start to the autumn season.

The sales performance in the third quarter and increased mark-downs due to a
higher opening stock than planned had a negative impact on profit development.
In addition, profits continued to be negatively affected by the strong US dollar
effect on purchasing costs.

We have made considerable investments in recent years, including within IT and
the development of new brands – for example, we will launch one or two new
brands next year. These big investments, which have burdened our profits for a
long time, have been necessary since they have created a good and solid base for
sustainable and profitable growth. Building on this base, we can now continue to
develop and strengthen the shopping experience within a number of different
areas such as continued integration of stores and online, expanded and faster
delivery options and mobile payment solutions. In addition, we are working on
various initiatives within advanced data analytics and RFID. In parallel with
this, we have also identified several things within our customer offering where
there is potential for improvement. All this – combined with the fact that the
fast pace of investment is to some extent gradually starting to subside – gives
us a positive view of our opportunities for 2017 and going forward, both in
terms of sales and profitability.

So far this year we have opened nine new online markets and 211 stores net, and
we have a very busy autumn ahead of us with many store openings and the opening
of a further two new online markets, Canada and South Korea. We plan to open 214
new stores net now in the fourth quarter. We opened our first H&M store in
Nicosia in Cyprus some days ago and shortly, in October, we will be opening our
first H&M store in Auckland in New Zealand. By the end of the year our presence
will include stores in 64 markets – and 35 of these will offer H&M shop online.”

Contact
As previously communicated, press and telephone conferences will no longer be
held in conjunction with the releases of the Q1 and Q3 reports. In order to
avoid any phone queues when the reports are published, it will be possible for
the financial market and media to call Nils Vinge, Head of Investor
Relations, and ask questions during an open call between 09.00 - 10.00 CET on
these report dates.

For log in details to the call on 30 September, please register at hm.com,
investor relations, the calendar, nine-month report 2016. This phone
conversation will be held in English.

After 10.00 CET Nils Vinge will be available on +46 (8) 796 52 50 or via email:
nils.vinge@hm.com

To book an interview please contact Kristina Stenvinkel, Head of Communications
+46 (8) 796 39 08   stenvinkel@hm.com

Information in this interim report is that which H & M Hennes & Mauritz AB
(publ) is required to disclose under Sweden’s Securities Market Act and the EU
Market Abuse Regulation (596/2014/EU). The information was submitted for
publication by the abovementioned persons at 8.00 (CET) on 30 September 2016.
This interim report and other information about H&M, is available at www.hm.com