HMB SS

H & M Hennes & Mauritz AB

Consumer


Presented:11/05/2014
Price:SEK294.00
Cap:$1.15B
Current Price:SEK174.80
Cap:$33.99B

Presented

Date11/05/2014
PriceSEK294.00
Market Cap$1.15B
Ent Value$1.29B
P/E Ratio28.34x
Book ValueN/A
Div Yield3.21%
Shares O/S1,655.07M
Ave Daily Vol1,140,000
Short Int2.23%

Current

PriceSEK174.80
Market Cap$33.99B
H & M Hennes & Mauritz AB (publ) provides clothing, accessories, footwear, cosmetics, and home textiles to consumers in Sweden and internationally. The company offers basics, tops, shirts and blouses, cardigans and jumpers, dresses, skirts, pants, jeans, shorts, jackets and coats, blazers and kimonos, office and sportswear, lingerie, socks and tights, sleepwear, swimwear, accessories, shoes, and maternity wear, as well as cosmetics consisting of make-up, nail, and bodycare products for women. It also provides T-shirts and vests, shirts, hoodies and sweatshirts, sweaters and cardigans, jackets and suits, coats, pants, jeans, shorts, sportswear, swimwear, underwear and socks, accessories, and shoes for men; kidswear; and living room, bedroom, kitchen, bathroom, outdoor, baby room, kids room, porcelain, cushion, bed linen, towel, storage, blanket/throw, curtain, rug, and decoration products. The company operates its stores under the H&M, & Other Stories, COS, Monki, Weekday, and Cheap Monday, as well as home textiles from H&M Home brand names. As of June 6, 2014, it had 313 stores in the United States and approximately 3,200 locations internationally. The company also sells its products through Internet and catalogues. H & M Hennes & Mauritz AB (publ) was founded in 1947 and is headquartered in Stockholm, Sweden.

Publicly traded companies mentioned herein: Hennes & Mauritz AB (HMB SS), Associated British Foods plc (ABF LN), Inditex SA (ITX SM)

Highlights

Shares of H&M are currently trading at around 24x expected consensus 2014 EPS and 22x 2015e. With shares hovering at just under 300 SEK, the presenter thinks the setup and risk/ reward are favorable for a short position. He acknowledged the difficulty in gauging the timing of H&M’s stock breaking down, but thinks it is inevitable. The issues supporting his bearish view suggest that one of the leaders in the fast fashion movement is not prepared to deal with increasing competitive threats, and Street expectations for margins may be unjustifiably optimistic.

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Idea Discussion

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