H & M Hennes & Mauritz AB (HNNMY) Inactive 1 Oct 202020 Q3 Earnings call transcript

Company Profile

Participants

Helena Helmersson	CEO
Adam Karlsson	CFO
Nils Vinge	Head of IR
Daniel Schmidt	Danske Bank
Fredrik Ivarsson	ABG
Chiara Battistini	JPMorgan
Niklas Ekman	Carnegie
Adam Cochrane	Citi
Aneesha Sherman	Bernstein
Rebecca McClellan	Santander
Richard Chamberlain	RBC
Simon Irwin	Credit Suisse
Anne Critchlow	Societe Generale
Andreas Lundberg	SEB
Charlie Muir-Sands	Exane
Magnus Raman	Kepler
Peter Testa	One Investments

Call transcript

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the 9-month report for 2020 conference call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] I also must advise that this call is being recorded today, Thursday, October 1, 2020. And without any further delay, I would now like to hand over the call to your first speaker today, CEO, Helena Helmersson. you. Thank ahead. go Please

Helena Helmersson

Nils of our and thank start conference joining X quarter about with results today I third and to Head months today. happy questions. going focus forward, this summary quarter and is me With telephone we Vinge. the the to will your short be of will XXXX. Adam you Relations, Investor everyone, third our Karlsson us for Welcome a and CFO, and Hi, then H&M answer Group's

You the find X-month will Investor report Relations. on h&mgroup.com,

a going of rapid Our than counter COVID-XX, recovery is better actions still decisive appreciated expected. the our This and is is impact of us. which result collections negative to much affecting and

temporarily With cost in gradually closed stores growth online profit returned Our continued more and strict sales and reopen. than control, expected we third quarter. already to remains strong the profitable full-price to and

have the the from amazing placed around an job, of teams done to is come behind although worst we the over, we us stronger. and out and are Our crisis that far well world believe are the challenges that

more flexibility, of We on in changes that agenda will the pandemic. profitable many sustainable, centered have we and resilience. the will be to and people focus and continue our started omnichannel, customer. before fast-tracked and has sustainability saw and of around happening the already speed the COVID means shop market transformation, online outbreak our the this More digitalization during on and

strengthen in recovery. important have The investments our that very a interact where they and convenient other. value and for customers substantial and experience Our stores made been showing recent us inspiring online that we years clearly are each

further sustainable in relevant optimization particularly availability our wake the channel our integration. Demand also products expected that COVID-XX even ensure of are transformation and in the to portfolio includes will of are is has This more flexibility To to value, to in we in future, meet and Now, important highlighted our and be all digital speed investments, grow customers the good store supply improve to channels, sustainability. in up pandemic. order speeding importance chain. expectations. the offerings for the customers' work

offering positioned to wants customer make and is possible look good. this everyone for to feel Our well and H&M for it

will continuously We of assortment combination sure and customers fashion, sustainability. best make improve quality, price the offer we to the our

sustainability streams. Together you materials also with H&M our accelerated take Our questions. will and - now transformation revenue enable to our the much growth and climate the is benefit part profitable will for Thank contribute help drive us build happy long-term profitability gradually positive and share circular very and your development work. listening for it an the work, of will renewable we and are become sustainable important to increase new It of of this resilience to to Group.

Operator

our Bank. from is So from of question Please the line Instructions] first [Operator question. your Thank Schmidt you. ask Daniel Danske

Daniel Schmidt

coming does go you that COVID-XX before me. the behind morning, out and Nils. first question. that of questions Helena into Adam that recording Helena, XXXX? that back from of are the stated that crisis when trajectory of and you is you were good the mean feel be implicitly on Yes, as you sort you That's worst Couple us that strong, could the you and

Helena Helmersson

all from and we to, beginning the we one have helped pandemic, course end we going that this agenda is example, and our are year back the results the of related of The course, parts recover also also some the and it quickly the in of footfall accelerate to, this also clearly more to very exactly for to when with paths of learnings now, us that also different of but shows future. the we agenda us forward. last that worked can had the done will of a cost saw us of we has in comes and see happen, path is also that do momentum, with, going for example, stay for work how pandemic, of What is strengthened we and all that parts and the other the the we scenarios and unpredictable has control definitely to we for that see and have tried the flexible year,

Daniel Schmidt

this net on guidance, you when sort And Could some of foresee any saying do record? on and some jumping these year, from more of track history, to - your sort then sort what's stores, light ability of to what to extra next stores closing associated it in your XXX. your to looking comes costs you give and regions, closing you're shed capture sales back

Helena Helmersson

channels. It's that clearly see and we want of that closure net for a We correct customers we meet stores, believe, different next see XXX us in channels year. both in to

is growing agenda like years that online channels, come back channels time, the we continuously digitally again, really and clear us. to forward of integrating how to look to is is same as the the importance we of develop then course, work and something our that optimize channels. then to At stores, really, we our have of to we integrate continuously. on but in And the the will work network, that done. obviously continue with going the So Part will and store our to always

Daniel Schmidt

believe that close that today stores to But these close or loss-making XXX fair of during many loss-making to plan are to 'XX? you is it

Adam Karlsson

money the in Helena the obviously customer shifts As says, of to behavior changing stores. ability the some earn

how looking best assessing can we omni both the to way are - from an we line in top profitability. at perspective, possible network market and store ensure and optimize by the that we drive do it So market

on So, of is course, level assessment. part profitability that of location

Nils Vinge

don't we the typically profitable close most And stores.

Daniel Schmidt

you. That's from All thank me. right, all

Operator

Okay.

from Please Fredrik from ask Ivarsson of question your Thank next is Our the ABG. question. line you.

Fredrik Ivarsson

turn Starting of throughout has pandemic, the well. from Thank about with curious maybe you I'm question. than the short-term as but and coming thought looking all. sort Couple you cost you level first and think how that of you Helena morning reach? me that lower control, previously you. accelerated sort into my Good to QX, have could medium mentioned reached years, That's questions how of also that a

Helena Helmersson

moving of done this acting the learned a is what crisis that looking course, of see be as, we example, of crisis, crisis. would we for we of nothing the lot being related rooms, is our and this with us crisis When that fast to more the part during crisis, have flexible of big we in parts if fitting at course and decisive were do have which we very not actions, costs. from a can agenda our such also of Part quite in - which we forward, course and a a closing is

Fredrik Ivarsson

All right.

Okay.

proximity Does question, few significantly of Helena, mentioned importance speed imply higher going Second you the degree times. this quite flexibility a forward? of a sourcing and

Helena Helmersson

definitely make and of customers. flexibility do from chain, that integrated, reaches more assortment supply Speed sure want the it the of the until or we going work an important forward. will we the be a to of If course, at looking product, whole is ID meaning

how comes with So when up processes we to, obviously also we how network to set centers change it do and has more for our related it tech. then example, distribution to the

So great of flexibility and more importance going for think forward. speed that it's about be agenda we will that

Fredrik Ivarsson

but Treadler months question, live you a a quite last to ago And clear. not too much and related on that for launched QX, while. you've That's few been

for to is your hear that midterm? the Just expectations investment has and learnings curious also and about on initial that what your how been received,

Helena Helmersson

our Now, it's still supply Treadler sustainable. vision want interesting quite services chain that open offer other early is up but a very to days, to supply have the we chain where companies and make their more initiative to also

a and we're also learning still with to lot so trying discussions that customers offer far going in So, update forward. potential

of quite with So, draw see see from could days course conclusions, long we we early supply of to working have are kind it's our very we progress, chain. excited this final but experience lead yes, such a us, where to since but any

Operator

question. the Please JPMorgan. The next Battistini question Chiara is from Thank you. ask of from your line

Chiara Battistini

for my you questions. taking Thank

the of The can from And your should your in also Why that to Cyber be while closing, especially - loyalty you reason? bit be accounting was more where you're and that? pipeline be kind I on from us what that. consumer, impact average of that a [indiscernible] about in this negative you in the factors? Thank also do second higher you're indeed, will finally, just talk with more expecting if they Q, coming product for - net that was on closures us and external you terms given to QX, and are, cost would question, And the capitalizing overall, fall how into in on And about tell closures? than do closing you are why the scheme, to average the you the bit have kind can how program? on back Monday impact was are interaction consumer many the external margin a one wondering, be the markets Is from of store First concentrated will what ForEx. see thinking actually I guiding even will neutral now about members it could maybe you then you're I of locations Group the size of actually explain against you. QX XXXX, in engaging impacting from with QX, program the gross actually size on post store factors the they and the what quarter. wondering markdown the

Adam Karlsson

a question remember it but of and right? you for the gross please it listeners markdowns, Thank one could the lot was I you, for one questions. make time, and next by margin Chiara. us, the That first take was To easier

Chiara Battistini

Yes, thank you.

that. about Yes. Sorry

Adam Karlsson

situation quarter, markdown fourth also as anticipated sequential Our markdown was and a previously then point view, for is than of the four. is a lower pressure a quarter - third less from assessment the lot in also level looking less quarter of markdown reported, - the lot level but

quarter, that believe down in activity throughout we below heightened overall had an we will the we still So far third of slightly the quarter. markdowns have level the but

So the sequentially proportionately come this that it point increase our best assessment will down. in is quarter, fourth at more but

Nils Vinge

the your closures to is comes market-by-market, of Korea - this Europe. closures, of I it the we optimization, of And closures prioritized store when and think to be comes then most the in store US South and most would number Europe. to openings, when question something And Eastern will course. mainly Japan, be highest And Russia, specific it do and

Helena Helmersson

with When it H&M and we members. comes have loyalty around the XX brand, members million the program to now

customers, in can build so we that and this that us. also and level, with make interact way to a see that For meaning to a us constantly more with is - back - they customers great we a relationships come deeper sure on engage also

course, number So, that million. we around XX see to are happy of to the has increased

Chiara Battistini

on If you. on I my just impacting just Thank of up may the QX. factors external two follow questions,

confirm FX to QX? would is So actually you that in gross neutral margin

Nils Vinge

of margin. always, lot are influencing As different there the a gross factors

to for the be so assessment primarily is why for dollar the that's We for helping look currency, value, QX, that factors are that if forward, pretty we gradually speak, going market just to together, you these and is is quarter. we take best and external US referring fourth and to the purchases at our us assess neutral all the the

Chiara Battistini

Group is on closures, the expect stores increase you closing an post the actually should also stores? in size follow-up store are the we second large average closures, question or of average, on average size the store And of the

Nils Vinge

the to think the view might a looking said size and store at store. optimization, Adam in lot store going store to looking - brands, not then each when decision at the at a I differ think look always before, as holistic it's from back online, do what we looking such, at we I stores

the size, the how about fits store in it's it's picture. total not So more about

Operator

next from question. of ask line question from Please Our Thank Niklas Carnegie. is your the you. Ekman

Niklas Ekman

is that or more. Yes, like the have. That's you XX% impression trading, maybe store firstly, still my given minus fairly still to I'd a the September. closures around by of market solid ask down is number, X% And in current about this the

see this with I'm sales if this, major new you you So to you. online drivers suggests what That's first collections, you driver? by my just curious here can a see outperformance question. elaborate much if is a agree on the bit stronger

Helena Helmersson

Right.

means, customers the comes where the and meet channels the continue collections us. store very means creating we the meet the then of and the customers omni, done means on with do omni and the when agenda new are Then see optimizing it see That thinking that they mean fantastic I course, that that have to growing well trying assortments. So the benefit integration. teams a choose of integrating to it it network, listen received to we to the job to online, also and

Niklas Ekman

not question is out but are in kind cost compare see better store here XXXX, basis, COVD-XX XXXX curious second structure. a of there of stripping a you to And compared the closures, the going and for cost you for just if outlook in of et related comparable a just cetera? terms impact, costs terms potential kind position back to negotiation - a XXXX, lot tangibly of you lower power do I'm in for on costs? rental in so agreements Is of

Adam Karlsson

lot flexibility a to Our dialog. give that continue agreements the with of landlords us

also going for is actions as the ways and testing a third third here new we're we and consequence continue we of reductions pushing a third partly crisis work. actions, affected of a decisive lot things, quarter we really of as work of with that is we're well. combination mentioned, early managed boundaries So cost have in continuously quarter that partners It's and but learning will how the why quarter. partly short-term, forward now, that But Helena have of mitigation sort dialogs our also

so And structures we the have is we big that's to But of I continue work asset think combination cost will with. a a our flexibility related in and questions. rents to something huge it's

Operator

Thank Cochrane question your you. next from of the question. The is Citi. ask Adam Please line from

Adam Cochrane

questions if may. I Two

you can level the I about the standalone around growth online think improved a with really you've how description higher with that seen? is, online of level of profitability. the Can profitability slight a that to of first that how online want profitability you the a sales question explain basis? channel level give total omnichannel, your has clearly, by at volumes then, The feeling And the you get in impacts on further

Nils Vinge

to times, many Okay, combination Adam, having stores, speak. of difficult the we've as one the and the from against take the other, to physical a discussed both - this - the it's is online other so and

are Helena's think and is have the I again that integrated here, developing here we more. secret integration So, point to the the even

if it closed are really is when it was very the customers try and online the you strengthen omni an of other. in to the want, and QX, in course, that the we So what and whereas pretty and high actually and the in break channels customers was help see with complement store online out, good, each volumes increase stores given channel But channel. their QX shop in the low and shopping continue to profitability

Adam Cochrane

higher online moving with working but can to going profitability your variable it's would base, sales a penetration leases online level it's there if the or of remains where remain your some absolute your the scenario those, high forward, cope actions or of your store high any it than online taken profitability cost changing you've a store whether remained Is practices the profitability that was? are that on lower and whether

Nils Vinge

Of course.

Adam Cochrane

of reduction of able describing done in cost working the hours orders permanent stores? with then in any are store practices, to doing maybe the you from you stores, reduces online they're and from cost that base terms doing In base of needed perhaps, the store terms of idea which number that you've give in What things are that?

Adam Karlsson

things and has and here, many go testing we're alarms from forth. of into of adjusting during number sort it's been that the tagging spring forth, what to situation summer this some handling As put of here. tests, and we work of now, - and the with mentioned, sort administrative are the range as many trying behind examples We're sort stores of so partly work stores things those aspects so tagging cost. really take here reduces it's to and of force and learning in how It's but to doing. everything some those deliveries and wide source a we've we're practical away But looking

Adam Cochrane

members And that very and H&M final impressive really was around XX of it Club. question, your million

markets those customers, are them got the members obviously have on, how changing with store? give they they put their the how stores data the you've increasing you in Are shop? are are they once data may shopped in conditions us those reopened? an on you still when are data going Are stores online, shut, please? how are they have of, you that online Now trending where got Can with as the back you've to idea customers are the markets that behaving where

Helena Helmersson

that one online, customers, in want to I store a even us can their something sometimes store, want us clear to store, to to is they then might and online don't us they becoming something to go they meet or up in sometimes go they they to guess what find channel; is could want to find that they online order to want pick want a that more they meet size.

to just we few clearer and in loyalty customers data - interesting that channels. new to ways with through can at it it even when engage the program meet give clearer want both customers becomes So - that and very and looking and clearer examples, a us in our becomes interact

Adam Cochrane

this period? customers Has million of from their you've it before of had behavior got at these - Obviously, all some XX you've changed throughout COVID.

in of throughout saw shopping you the multi-channel stores COVID. their through the COVID then Have more behavior, changed gone you of and continuing You've period any are they reopening? that or noticed online just or before, change structural they haven't trends

Helena Helmersson

channel have see the we Yes base online the time. overall that customers more entered first is what in our for customer

seen way different and do that see in faster have been than kind customers more that of we have a we So before. channel to introduced

Operator

Aneesha Please your ask you. is line Thank of from Bernstein. Sherman question question. the Next from

Aneesha Sherman

questions please. have morning, Helena good two and Hi, Nils. I

Can to closures year. on changes about you're any closing XXX conjunction First organization that or in stores? talk store you planning Are the in changes of support major to store again make? you one that making organization the the next corresponding making the with is

Adam Karlsson

Practically, portfolio of we possible new and the in the to best those we that into are with find support the footprint look the run looking we and of way. working ways slightly to support how store stores, obviously, stores course need consolidation, best the Then will to different.

no at affect. look we view, how totality So point of but [indiscernible] from assessment that of this of a may sort

Aneesha Sherman

go sorry, improvements were please? you've AI - shed And light that about then Can various and especially that the of building that your CTO, the you new under question years is, some have of My second for the the my will ahead. few progress project, you spoken on across the leadership business. now

Helena Helmersson

is tool to and stay that AI one helping and us definitely to Well, become fast for customer flexible. great is us focused really also more

example, use hit tool that kind for both to for and supply for different demand. customer faster. say, become a what some collections also in us we is AI So to would us improve I chain great of to wants rate comes of value it our our when parts forecast And in and to to extent, chain, the

Operator

from from is your line Thank Santander. McClellan of Rebecca the question Next you. question. Please ask

Rebecca McClellan

good And a of couple Yes, questions please. morning.

shops close in to expecting Firstly, that you're percentage does what of the sales represent? XXX that XXXX,

Adam Karlsson

now now being biggest it's during profitable closing it's stores with as to not little and perspective. the the closing are stores a We we're as most year, turnover - not we're this well, closed Nils here obviously, from the but said difficult bit say stores

lesser be on there turnover perspective. profit from impact will a and that So a we number assess

Rebecca McClellan

cetera. Okay, integration just, et about you're thank of importance the talking you. secondly, sort of And

Click and to and this last in Your online XX XX Collect markets, is returns time available compares XX which year. XX, in-store

that of the like across motivation market? not of get broadly spread So a sort of increased more sort is sort out that to

Helena Helmersson

Yes.

that really All channel integrating work agenda actively forward. of that we these about is is the want to with going initiatives an

had is to Of down important we course, while. for some initiatives during to a utmost going the forward, continue. this crisis, slow But of

Rebecca McClellan

of the online in And for store also example. automatic to of rollout stop sort

Adam Karlsson

omni are to markets. that package that of very the related we we platform having can and full doing step-by-step much taking are so enjoy customers the out, transformation some it's are Well, in we rolling and sort

that the technical a to little backbone. So bit the connection is

Operator

Next Thank your from question Chamberlain is Please question. Richard of from ask the line RBC. you.

Richard Chamberlain

Yes, I, and just couple Thank a thank QX in third questions of all, you. rent comment rent you. the of the please. terms were expect you relief what in Good support? first had quarter? could temporary And on for we much of reliefs government how morning. should I

Adam Karlsson

rent The absolute of flexible on the with agreements are the reductions majority based landlord. our

based here. - the rent. it's of has some savings second quarter with contributed rents we that has majority the dialogs the quarter. So absolute to is have the landlords turnover of affected during the But had majority is But flexible also third cost course, start that absolute

Richard Chamberlain

Okay.

if So the the is it quarter? rental of pretty you H&M that's is, sort holiday amounts then in of like, for small

Adam Karlsson

trickling And Yes. it is total, a as also down. now

by UK, So it's quarter. the we relief have fourth we continue that But do impacted some and less in example, markets, for for for throughout the quarter. a will have rates third lot that - business the

we So the rent do market there set-ups the are flexible market, variations from have. majority but to is

Richard Chamberlain

and support support, Yes, in fall the of quarter? the majority the governance furlough, away presumably fourth will government

Adam Karlsson

exactly. Yes,

Richard Chamberlain

Okay. Thanks. have please. another question just I And

is Just online But from faster supply that strong in And get number already. in a to which coming speed on I seeing Asia to reduction being you've so terms weeks, Asia. subject you the material of commented to are that's so by you seeing markets? demand, much driven taking your on are of product of sourcing wondered, times market, the and from

Helena Helmersson

speed as just whole, and a flexibility industry and Well, the more more will become important. for

that kind of in of is kind what sense. to also clearly decision-making is overall that makes some enabling than shorter we worked and lead the customer, So on changes times from if being timelines tighten of see ID processes to

Richard Chamberlain

it. Yes. I get

Okay.

Okay. Got it.

very thanks much. Okay,

Operator

is Irwin Please Simon you. Suisse. of line ask from question the Thank Credit question. from Next your

Simon Irwin

any been quite being of lagging can there talk a to and relating years, you just are of elements replaced those the to payments? pay Obviously, about kind a And Is digital? OpEx also make rents, just things. Or by of comments about talk is the are over kind a which turnover you little ones bearing some sales? when I quick. based around bit and try up you of big timing the bit it now of little programs the some I'll helping through? have the accounted the the programs IT in that quarter there more Can they you for that kind in But off. particularly few going I'm thinking, other accounting are are and mind, rolling or don't last few of they speeding know,

Adam Karlsson

First question to regarding with the turnover paid, we in advance, due rents, previously of situation the now I the adjusted we mean, because the have have that but uncertainty now turnover.

So a slight there first effect is lagging to the here question.

of that digital example course, so see in to ways meeting simple we as and now work to impact of use quantify forth. traveling the But smart such business. are parts not of now we of the Secondly, how many it. hard It's we able and

total So to so say. Difficult to us the it's many in quantify impacting impact areas.

Operator

Thank of Generale. line from the ask you. your Critchlow Societe from Please is Anne question. question Next

Anne Critchlow

different about Are there? how is there question, through you pandemic? they've any the surprises any question My have my first in Did the concepts. performed differences big

Helena Helmersson

need our brands you demand that different if different more products less basic as or about brands. or more we overall, But sure increased and can mean the Not have that an crisis, overall, we we seen in say during concepts. we have on two, quarter the we would in in all see spoke portfolio

Anne Critchlow

we question store years? should the Do in for the outer closures. or see pencil one-off my second in closures a is program a similar then as And XXXX store Okay, number this about of thank you. you

Helena Helmersson

is that in want this stores and develop what going customers network. us, of meet physical agenda to we our store we continuously we the they also that stores physical forward living So tells a and kind Obviously, lot in see a believe us is online.

So, onwards. to and work after continuously, give numbers difficult development and then XXXX with this we agenda,

So on. the to later channels, to again would back But of the get which back integrating we'll that be key. importance

Nils Vinge

flexibility, also we that adjust accordingly we And go. can as so

Operator

your you. question. again the Please Thank Daniel Schmidt. is question Next ask from of line

Daniel Schmidt

follow-up me. a Yes, just from

You have on exactly to sort when of to that some to impairment it you of close Could an EURXXX extraordinary charge light comes projects? million. more shed what development refers

Adam Karlsson

reviewed extra during but that on have also we put and both this of as the then development I everything of company and the light and did - also and project. have ongoing previous summer, is review sort We the top-to-toe a we some as the in development spring about third it's provision And for connected consequence And saw before and transition the into impairment project, tech getting then into modern do test and it forth. new then more platforms to so I to we we what also the the data spoke when a we're opportunity and quarter. infrastructure, this assessed and the

Daniel Schmidt

do But put or hasn't to it? a COVID-XX sort really has is with been accentuated of by that to anything COVID-XX, it right way it

Adam Karlsson

put No, that it's more we everything have extra light on we do.

we really do we with. So and it's more process reviewed in that the work that everything part of

currently everything of COVID-XX. the and to assessment the full we the have to we are of connected doing done mitigate ensure more it's effects So

Daniel Schmidt

from any of of million, you dusted. sort Is data took coming EURXX more the that the that's sort coming done that And the and quarters? there in breach fine consequences

Helena Helmersson

to So got it comes just when it. we that,

it for a we that reviewing are have decision. and we now provision So

Daniel Schmidt

be is be you're referring Could provision of less or to? Or it are sort you sort in it in you could reversed right? took because you're or of what go any QX that going forward reviewing to way the how

Helena Helmersson

QX. Difficult decision the provision comment now in under But question, We we our their them or review. have is this took and to got higher. the on Yes. lower

Daniel Schmidt

seen that - Have of you are question similar final your return a peers broke many rates, they've on sort of significantly return a just of sort then seen pattern? lower of out. rates sort And saying online COVID-XX since

Adam Karlsson

what regarding connected the question previous see it's to do We that, and also have we sold.

follow it's may and Helena basket need the over of lot believe more mix a will normalizes. basics, product rates course, product, lower So that. But what when then and return said, and connected shift as we to of the of that related consequence a what sort to time demand

So, but we in now returns. here reduction see

Daniel Schmidt

seen of to past return you months of the more looked at rate? couple you already a shifting it sort Have if normalized

Adam Karlsson

three quarter in high demand - we categories. still need said, Helena as that relatively in product the the but higher No, the see

of So rate of will as be a comes sort return is from that sort returns, there as of a sustains, long mix when slight or it which point to favorable. shift view,

Operator

Our next question. you. Chiara from your line Please question is Thank of Battistini. ask again the

Chiara Battistini

one. Just a quick very

On the partly wondering, Thank OpEx, between us also And please this group? of is give in in allocation I allocated can the margin? just charge, you it's the EURXXX the so, the all or two, impairment million a charge if gross split the you. was

Nils Vinge

Yes. SG&A. The EURXXX million is under selling and -

Chiara Battistini

Okay.

COGS? the So nothing in

Nils Vinge

as the Yes, well. in do impairment COGS there Adam That's said, always, some we are continuously. test as

there yes, So but COGS material. always in as as something the well, not that's are

Chiara Battistini

Okay, thank you.

Operator

next is Thank your Please the ask from of from Andreas Our question you. Lundberg line SEB. question.

Andreas Lundberg

Could Madrid I updates your store you've some chain? you us opened Milton related a give forth. few online, and pure know online some warehouses, and Germany, some Keynes, supply new on so

how And Thank So in And places? we you. what's running in facilities still performing? they're to there? some are double the status

Helena Helmersson

chain availability so we forward. - store we we very channel when different that are one that to availability we We part to can way Keynes. kind that and develop One continuing the agenda the that example again of And and also of channels when it definitely have continuing comes kind The the where of and our on kind discussed at lot integrating go is have distribution far means agenda which accordingly comes our of merging that what seen confident we to Milton that. results are the merged channels channels, the the it a us merge online that is makes supply to have is so good as today. centers

Andreas Lundberg

or Thank to the old closed? warehouses sort you. still them you plan But have close/open having that are you of

Helena Helmersson

We is constantly mean, integrating comes channels it to and also doing development. the when centers journey - distribution that I of under

So be we kind will to the merge is physical this but would channels measures definitely make take the different importantly forward, - of agenda is about the platform about even more centers, also distribution more the technical that the going happen. which may

Operator

Okay.

of from Muir-Sands Thank is ask the question. Exane. Next Please question you. Charlie your line from

Charlie Muir-Sands

your pay you you advance. back previously, sorry, just question is, in to to earlier, to rents first clarify, Irwin's just My question going wanted said Simon used

Now lag. there is a

a you Just accruing though, wanted for are check to in you that? or go, there now as P&L a lag is perspective

Adam Karlsson

there No, to from say. they when occur, no the is taking cost lag so

only flow it's perspective. cash So a

Charlie Muir-Sands

United QX. in States. Second to one specifically weaker was is XX question top your It - relates markets of

footprint that You particular though you're there? out you store across market substantially closures US, which the doing in in as year something the even in is your in making a also transformation more a for the than ahead that's there aggressive Is say, happening might US focus the it be have, stores of in called Europe. fewer you

Adam Karlsson

from when coming share we we affected also the We've seen the stores, stores so and forth. US closed exit into market highest the quarter, X% XX% have we closed, and globally where we the But still is and hours had limited now have trading both closed. or that quarter of so

has in of that the that coast are more the results So market. the proportionally selling that the see reflected parts very and also markets other also - the densely US in we sort than on populated more is different the the of can in in present where for throughout we affected and are US We quarter.

COVID than So other to shift, that other than is there of when the rather in of effects big that but sort in the more lag US it comes no affecting temporary us markets. a

Charlie Muir-Sands

us you question with for thoughts budget quite closures. your And respect on would clear. to be significantly to glimpse Very I EURX respect helpful original rate EURX and your a sustain? play bit cut CapEx, final a an which the give it XXXX to, to openings XXXX or of store which billion early to is was you've loss think typically this for I Do my to when something business with close just you into remain catch up think, is, wonder little the year, down you can that run go QX. gave billion very you

Adam Karlsson

more - No, we more start start suppressed a again with sort little assess solid under our that visibility, feet, now to more this that towards ground investing of to levels. as bit can we level that we start believe where normalized we is see we'll believe we get will we and

Charlie Muir-Sands

levels or would And little think be below do you with more bit that? normalized line in depreciation a

Adam Karlsson

good levels to relate of but rather that set, a sort XXXX to, fully we haven't is benchmark XXXX. We probably believing XXXX than are

Operator

of the line McClellan. you. Rebecca Instructions] [Operator ask is next from question. question, our Please We'll take Thank your

Rebecca McClellan

Yes.

budgeting the conservative towards sort of more please. what carrying of than that? of of having of were or - still there inventory, are minus X% stress composition Can budgets how Just terms of inventory of if talk forward? sort sort constant you your Autumn-Winter, currency about levels - for you your some from sort much in is Spring-Summer a follow-up is also me, you're And

Adam Karlsson

do a with the one this it we back customers. relevant how and To us have work offering match about to second as Helena sort when is the to composition, mentioned, the buying. quarter really teams to keep of for the inventory demand after pulled done assortment out, start questions the And tremendous the offering the the reworking we key spoke that have a on from customers we

spring we inflated anymore, stores a worry technical the summer having to to of even now, those much able see level is discount. shift we are can with we the out had before naturally, take closed, not many too So But though slightly we have garments. big as without as so

pleased composition And are sorry. the second question, it your forgot I as we now. with right sits So

Rebecca McClellan

constant was which the about for Autumn-winter, whether was talking the minus I around sort of level budgeting X% actually was I you're the for? currency asking

Adam Karlsson

believe more to can fluctuation that we if them for than stores that have we - lay-off we ago. respectful is that we the can open mentioned we stores also we a continue approach do No, now constantly now right situation, number to I come, having and the fluctuating, also that actually affected week can And here. conservative better. stores customers But when think did is we a are is Nils closed are believing of

there believe we to don't for So make prognosis any quarter. fourth sharp

Operator

Next you. Chiara Please question. Thank the your from question ask is line Battistini. of

Chiara Battistini

through the for more give color would was able to you online feeling Thank been sorry, bit you. On regionally? the really And last on and me. wondering, improvement a such us trading, are offline the maybe starting stores? a coming is bit consumers and it re-opening seeing one X% it on minus I stores to September, as actually be current the an coming is more comfortable recover - to both or from offline back Hi, have on you're also where

Nils Vinge

Chiara. Hi

the affecting, can course COVID update still see of differences due market-by-market, differences you market-to-market on to there big is and that As how and from are in the the different markets like the it, hope in And of case. we it us. are still not are though most remind I that behind that out even of crisis, everyone is we still just we to is

of spoken obviously, big well, So these there -to-market, online even stores, now as are said customers we've the differences. both the numbers here of omnichannel online within well, big in in differences between the course, can many importance they very and is that also and thing Europe times but now are continues that we Helena channels to as from really shop do market happy. the see when And

Operator

from question Raman is Next your question. ask you. Magnus from the line Thank of Kepler. Please

Magnus Raman

question morning. good I want to come just returns Yes, to online here. the back

return be lower online also a COVID-XX of rates. basic introduced the demography Could to have that returners. down items groups, high by pushing mentioned customers also customer relate share been the channel and potentially to You they new driven here? older mentioned perhaps You might change it

see be more you might do So that sticky? as such effect well

Adam Karlsson

included we also in shift probably It's do. the

a are both be mentioned, of elements the need also that of and this less that increased is sort throughout basics Helena kids affecting, they but need to period sort product on lot products, they returned. product, versus wear big as the but this prone there and of the So are so we demand forth driver see want of

Magnus Raman

on just a also then markdowns. And Right. follow-up

expect or initially points. an beginning environment I out price mean, than X.X market QX, favorable price to quarter, X QX in turned Your better the and markdown have sales given of percentage in your If of or the that smaller ability you for not? was QX environment you QX do expected, - the in more increase much in increase it's than full at sort markdown projections to the that you anticipated now you in included

Adam Karlsson

I just of our the quarter. mentioned and fourth how of And are quarter, Yes, as give we quarters. less I fairest now during to have, mean will but it's as markdown we as quarter assessment before, do second the well best act

that's gets it's So but proportionate absolute lower here, why level. from a the bigger effect

activation it's need an to give we indication look. of of some So, will how just believe of the kind

we the the lot. but year bit went last So relative it's goes up - number, down a not dramatic quite increase absolute a just as in quarter for fourth a

So --

Magnus Raman

comparison a decrease a even for quite make quarter multi-year QXs. like is and the comparison general, a it's also increase QXs, that if in Right. in stack QX, with case The soft also back still ask smaller a you comparison to just as to if stack speak, with reason at markdown you so in on markdown arrive

Nils Vinge

But be as here. right, but Yes. said, to you're Adam need we cautious

We just to the are that. crisis, not of still about out remind everyone

the it's [indiscernible] still - longer the we get that to still think better we higher we cautious I have spring level to So have in and view, garments is want and to a term. than

Operator

Next question. your ask question is from the Investments. Please line of you. Peter Testa from Thank One

Peter Testa

is prepared remaining you you've just as visibility Two do gross over fall-winter? inventory continuing carried on point from the that the in please. spring-summer margin, Maybe have Hi. move - that the September largely because questions you out

Adam Karlsson

question please. repeat the Say again,

Peter Testa

in visibility stronger the the moving the have out markdown may you have for you prepare the because as Do carried inventory over of collection you spring-summer fall-winter? you September before that remaining mentioned

Adam Karlsson

look and We level. of how in work and are then we reviewing assessment commercial sort consciously plan the on our that's there, the reflected the in that throughout markdown

what believe and we to commercial it's we So the agenda. both forward what connected see going

Peter Testa

Okay.

Nils Vinge

where middle in crisis. have to a X really months of we visibility the stood we compared the definitely when ago now better We were

Adam Karlsson

course. Yeah. that yes, of On note,

Peter Testa

yeah. Yeah,

about Okay. - sales. that in sorry, will unwind Is with have unwind excuse say, And QX is expenses the may XXX unwind may QX the now mean in me, that else I turnover rents you on other QX expenses. move of the question measures now going, anything you furlough QX? just obviously said, there will, - and as short-term

Adam Karlsson

No.

know also of the of We are customer offer that full we now opening, want and course, sort when experience. stores to the

little some we are the forth. we've of measures, of There the sort of fitting set-up we this bit will some Helena and rooms closed remove stores of move into mentioned, normalized so phased be components operations. more believe will as and out We as a and extreme that

Nils Vinge

need course, resources and, of accelerate to we as said, and But Helena also happen. start people that we now to things, make

that's again. business accelerating So now why gradually the are we

Peter Testa

Yeah.

this much. things a start you to people as of the enter of year. seen so environment, normal very years thank on Yeah, and will what okay. time you Perfect, would in do like more at representative and have marketing you prior So initiatives become

Operator

questions, continue. further No more please

Helena Helmersson

wish thank for So you then best. the all all participating you we very and much today,

Operator

include for that you all conference So Thank our participating. today. does for

You disconnect. may all

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