H & M Hennes & Mauritz AB (publ)

Good morning, everyone, and a warm welcome also to those of you who participate online. Today, we will present the full year results for 2024 for the H&M Group.

I am Joseph Ahlberg, and I'm Head of Investor Relations. Before I hand over to our CEO, Daniel Erver; and our CFO, Adam Karlsson, I'd like to share this morning's setup.

We are webcasting this presentation, including the Q&A. Afterwards, there will be individual interviews with media as usual.

We start with a short summary of our results and the past year from Daniel, followed by a financial review from Adam. And lastly, a run-through of key highlights of 2024, including a brief outlook from Daniel.

We round off this event with a Q&A session where all of us are available to answer your questions. During the Q&A, we will have microphones at hand, ready to give to those of you who wants to ask questions here in the room and also to then hand over to the questions from online.

And for those of you here in the room, please remember to raise your hands before asking questions and ask one question at the time. So here with his summary of H&M Group's full year results and his review of the past financial year.

Please welcome, Daniel.

Thank you, Joseph. Good morning.

A warm welcome to both those of who are here in the room, but also to those of you who are joining us online. It's great to have you here with us.

I'm one year in as CEO of the H&M Group, and I am confident that we are on the right track by building a strong foundation for our long-term growth. We have sharpened our focus on the core business with the H&M brand as our top priority.

When H&M grows, the entire group benefits, and we can reinvest for future and further growth. I'm really happy with the steps that we have taken so far during 2024 towards an even stronger customer offer.

This progress has been fueled by our plan to improve three key areas: Firstly, it's around how we elevate our product offering and the assortment. Secondly, it's about how we are strengthening our shopping experience.

And thirdly, it's about how we are creating excitement around our brand with marketing and communication. Looking ahead and looking forward, we see that the clear highlight from last year that we want to build next year on is the success of our womenswear collection.

Part of that success was how well received our autumn/winter collection was from customers when we launched it during this fall. That was a truly exciting moment for us where we elevated our stores in key cities, we elevated our digital experience, and we hosted an amazing amount of customer events combining fashion, music and culture.

So I wanted to start this morning off by taking a quick look at what happened in September and the launch of our autumn winter collection. So please enjoy.

[Presentation] This was both an exciting and important moment for H&M. I was fortunate enough to be able to travel around our key cities and meet customers and colleagues around the world.

It was important because it made customers rediscover H&M, and it was important because it gave motivation and inspiration to our teams, and that's something I've seen in the eyes of our colleagues in stores and offices ever since we launched our autumn winter collection in September. So now turning into our sales development for the year.

Our sales grew by 3% in local currencies in the fourth quarter despite the fact that Black Friday was later this year compared to last year. If we look into December from first of December until the 28th of September, our sales grew by 4%.

We see three main areas contributing to our sales results. Firstly, we saw a very strong reception of our womenswear collection.

Secondly, we saw positive customer reactions to our H&M's Move and sportswear collection. And thirdly, we saw the online store performing really well throughout the fourth quarter.

This is important for us that these are the reasons why sales are growing because they are the fundamental on which we will build the future success of H&M. During the quarter, we also managed to nearly double the earnings per share by having a solid cost control, even though we invested SEK 600 million into marketing and took around SEK 200 million in costs related to the wind down of Monki.

I'm pleased with the early progress, but I believe that there is more potential for us. We are not yet done with our journey.

I'm confident that we can build on the momentum that we're starting to have and that we can achieve long-term profitable growth. I will get back later on with some highlights from the year and a bit more about the things we have done and the successes we have seen.

But for now, I will hand you over to Adam, who will take us through more of the financial results. Please, Adam, go ahead.

Thank you very much, Daniel, and good morning, and hello, everyone. Let's start with the sales figures for Q4 and the full year of 2024.

In fourth quarter, net sales amounted to SEK 62.2 billion in local currencies. As Daniel mentioned, we saw an increase of 3%.

As you know, the quarter started well with strong sales in September, well received autumn collections and in combination with favorable weather in many of our European markets. At the end of the quarter, sales development was affected by Black Friday, moving from 29th of November -- or from 24th of November last year to 29th of November this year.

And for us, it means that a lot of the orders placed during November are actually booked as selling in December then affecting comparability. But looking at the months then October, November, sales in local currencies still increased by 1%.

We move forward, let's see if we have the next part. So yes and taking the opportunity to highlight some of the markets that performed well.

If you look at Europe, we will highlight Germany performing really well. We saw that Netherlands is doing really well.

We saw a strong growth in Italy. If you look east and look into Asia, we see Japan and India growing steadily.

And if we look west then towards the Americas, we saw Chile and Uruguay standing out. U.S., as we've mentioned before, is a focus market for us, where we continuously work hard to ensure that we have the best customer offer and customer experience.

For the full year, sales amounted to SEK 234.5 billion. And in local currencies, they increased 1% compared to previous years.

And if we look at the quarters, one can see a gradual sales improvement towards the end of the year. And as Daniel mentioned, this has been driven by womenswear and our category expansion into sports.

And this trend continues into the period now, the current trading period, the first of December through 28th of January, when sales have increased 4%. And a brief reminder that we will have another calendar effect at the end of this quarter, obviously, when we are up against 2024, that was a leap year, so that will affect February sales, somewhat.

Online stood for 30% of our sales during the financial year. And if we look at the portfolio brands, they were up against really tough figures from last year.

They still managed to increase sales in the fourth quarter by 2% in local currencies and for the full year by 1% in local currencies. During the year, as we've highlighted, Afound has been wound down, and we're now preparing for integrating the Monki operations into the Weekday offer, meaning that 48-week Monki stores will over time be consolidated and some of them will be refurbished into Weekday stores in the coming year.

If we exclude the Monki and Afound in the selling 4 portfolio brands, their sales in local currencies were up 5% during 2024. So if we move over to gross profit.

Gross profit increased by 1% in fourth quarter to SEK 33.9 billion, and that corresponds to a gross margin of 56.5%. As you know, there are a lot of factors affecting the gross margin, both external and internal.

The negative overall effect of the external factors that we spoke about during the Q3 report have influenced the purchasing cost for the quarter. But they were partly offset of the hard work that we have done we're mitigating these negative factors throughout our operations.

Investments in the customer offering that Daniel spoke has also significantly increased the -- or affected the gross margin for the quarter. If you look at the full year, the gross margin increased by 4% to SEK 125.3 billion, which corresponds to a gross margin of 53.4%.

And we've previously referred to a normalized gross margin level. And now we can see that we're gradually starting to increase our gross margin towards what we then refer to as a normalized level.

The cost of markdowns in relationship to sales in Q4 decreased somewhat compared to the corresponding quarter in last year. Also markdowns have been affected by the fact that we move and have this changed calendar effect connected to Black Friday.

A high proportion of the sales during Black Friday are obviously marked down and that portion of the markdowns will then also be shifted to December. But also to highlight that the strong selling in the beginning and in the first half of the quarter also enabled us to operate with a higher focus on the full price offering and less activation activities than anticipated.

Also highlighting in Q4 2023, the gross margin was negatively impacted by recalculation effect. The Swedish krone appreciated rapidly during Q4 in 2023, affecting some recalculations we do between the companies and highlighting VAT in Mexico is one of them, for example.

And this then worsened the gross margin last year and then makes the comparable gross margin this year look somewhat better. If we look ahead for the goods that will be sold in the first quarter of 2025, the overall effects of the external factors is expected to continue to be negative.

The cost of markdowns, as I said, some of it will be a technical shift from November into December due to the changed calendar effect of Black Friday. But we expect the markdowns for the quarter to be slightly higher than last year.

If we then move over to selling and administrative expenses. In Q4, sales and administrative expenses amounted to SEK 29.3 billion.

And in local currencies, this was an increase of 2%. The expenses during Q4 was impacted by the long-term investments in marketing that you previously mentioned, Daniel, and also the winding down in the preparation for the closure of the Monki store then having a drag on the cost of around SEK 200 million in the quarter.

As a result of the fully implemented cost and efficiency program, along with good general cost control, selling and administrative expenses still increased at a slower pace than sales both during the full year and the quarter, despite the inflationary pressures throughout our cost base and also despite the winding down costs we take for Monki and Afound. For the full year, selling and administrative expenses amounted to SEK 207.9 billion.

And in local currencies, and as I mentioned, this was an increase of 1% compared to the previous year. The long-term investments we have done throughout the autumn in marketing are continuing into the first quarter and Q1, the costs related to marketing are expected to be somewhat higher than the comparative quarter in 2024.

If we then go to operating profit. In the fourth quarter, operating profit increased to SEK 4.6 billion, corresponding to an operating margin of 7.4%.

Previously mentioned that the winding down costs of Monki had a negative impact of around SEK 200 million compared to the same quarter last year. For the full year, operating profit increased to SEK 17.3 billion, corresponding to an operating margin of 7.4%.

And operating profit, if we exclude then the result from investments in associated companies and joint ventures, the margin increased by 28%. Hence, removing the effect of consolidating Sellpy last year that had a onetime effect on the margin last year.

So zooming out and looking at the profitability trajectory, we see that 2024 has been a year where we're taking steps in the right direction, increasing profit by almost SEK 3 billion despite some of these nonrecurring items weighing on the result and the marketing activities that we have invested in during -- primarily then the second half of the year. If we move over to stock levels, stock-in-trade amounted to SEK 40.3 billion, an increase of 8% compared to last year in both local currencies and Swedish krona.

The stock-in-trade, as you know, has been impacted by extended transportation lead times connected to the situation in the Red Sea. But we, of course, make this decision to ensure that we have a full product availability for our customers at all times.

We see that we have a strong composition of the stock, and we see that is fit for us for driving sales throughout the spring. The stock-in-trade represented 17.2% of rolling 12-month sales end of 2024.

If we move to a graph showing gross margin and stock-in-trade, if you look at a graph combining these two, we have dark green line with the gross margin development and the light green line, the stock-to-sales ratio. We can see that we have a long-term upward trend in the gross margin, and we continuously, over the long period, come down in stock to sales.

These ratios naturally have some over the year fluctuations, but we are committed to continue to take us on this journey towards what we then refer to as a normalized gross margin at the end of this year and also take further steps towards the 12% to 14% stock-to-sales ratio. So then before handing back to you, Daniel, to summarize.

The increase in profit is due to good online sales, well-received women's collections, high gross margin and overall good cost control. That shows that we are taking steps in the right direction.

The capital allocation principles remain with a net debt to EBITDA well within the target range. Our long-term investments in our core business will continue at a high pace during 2025 and is the area where we have allocated the most capital to over the last couple of years.

This, we are certain will enable a positive development long term for the H&M Group. And to wrap it up, the Board proposed an ordinary dividend increase of -- or raised, sorry, to SEK 6.80, and that's a reflection of the Board's assessment of the financial position and that we have throughout the year, succeeded to create a strong profit development.

And in addition to that, the Board also proposed to the AGM to maintain the flexible tool to adjust and work with our capital structure. So they also proposed for the AGM a flexible share buyback program.

So with that said, I hand back over to you, Daniel. Thank you very much.

Thank you, Adam. So to recap our strong profitability development in 2024 puts us in a strong position to execute on our plan with full focus on growth for the H&M brand.

Our focus will continue to be on organic growth, also meaning that nonorganic growth through new business models will be given a lower priority in the short to medium term. So to clarify, this means that we have 3 long-term goals: number one, one sales goal, and that is for long-term sales growth of at least 10% per year.

One profitability goal, profit margins to exceed 10% and one climate goal for our greenhouse gas emissions to be reduced by 56% by 2030 with 2019 as our base year. So to recap, going forward, our top priority remains the H&M brand and organic growth.

I believe this will be essential to lay the groundwork for our future success. We are staying, however, laser focused on our plan with 3 key focus areas: firstly, to elevate our product offer; secondly, to elevate our shopping experience and then thirdly, to elevate our brand and brand building.

So starting off and breaking it down by talking about the product offer. As I mentioned, we have seen key improvements in womenswear throughout the year.

So I want to tell you a bit more of what we have done and what you have seen. Our customers can now find a more relevant, more current assortment since we are increasing our trend responsiveness.

We are also working with our product creation process to become faster. This is mainly due to that we have simplified our organizational structures, and we have deepened our partnerships with our suppliers.

And our customers can more easily find what they are looking or when they want it thanks to better demand predictions, better product quantification as well as a better omnichannel availability. So to streamline our operations forward and to further increase flexibility, we have also expanded the use of nearshoring as well as expanding the use of our FID technology in our stores and warehouses.

I'm really happy to see that these changes and improvements have really strengthened our womenswear offer, where we see a more current and more relevant assortment with positive development in full price sales. So we wanted to take a short look at the -- quick video with a few of our creative talents telling you a bit more of what we have changed and what we have done over the year so please have a look.

[Presentation] So product continues to be our most important and the first focus. Our second focus is our shopping experience, and here we are doubling down on making that more exciting and more inspirational for our customers.

And this year, we have taken some significant steps in improving the experience for our customers. To mention a few things, we have developed and upgraded our store format, where we change and transform the entire shopping experience for our customers.

We have also launched a program for lighter upgrades, including layout improvements, added tech functionality, improved product presentation as well as improved product availability for our customers. During the year, we have also done the full format upgrade in key fashion cities like London, New York, Tokyo, Seoul, Paris, Berlin and also here in Stockholm.

We plan to make experience upgrades to a significant share of our store portfolio in the years to come. To circle back on one of the other important success factors we spoke about looking at the growth for Q4 is the growth that we have seen in our online store.

And here, we see a positive progress that is mainly driven by improvements in functionality such as better size and fit recommendations for our customers, strengthen search functionality as well as upgrade the product presentation and a more convenient experience for customers who are returning online purchases into the physical store. We also rolled out a new more inspirational experience to several of our key markets.

Altogether, this has -- we have seen a very strong online selling, especially in quarter 4 and especially for the womenswear offer. We have also seen that during this time, we have increased our customer retention and the engagement from our customers continue to increase.

The third focus is building and elevating our brand. And the first thing that is key to mention here is that we are becoming better at connecting with our customers where they spend their time, mostly strengthening our presence in social media.

We have also increased our collaboration with influencers and creators alongside the focus we have with combining music and culture with our offering. We have seen growth in our social media following, and we have seen growth in engagement across our digital channels.

We also see stronger brand-building effects in the key cities where we have put the focus on our investments and efforts during this fall. With the positive development, we will continue, as Adam said, our marketing investments into 2025, in line with last year for the full year with a continued emphasis on influencer marketing or -- with most of our efforts.

Then I'm very happy to also recognize that the extended range that we offer within our lifestyle categories. So meaning home, sport and Beauty performed very well during the year.

H&M Home, H&M Move and H&M Beauty all have strong potential to grow in these categories that are growing fast and steadily on a global market. If to highlight something in particular that we're extra proud of is to see the development this year that we had within H&M Move, where we have made tremendous progress on both the experience but especially on the product and the collection.

To further deliver on our promise or purpose or liberating fashion for the many and contribute to our long-term profitable growth, we have in the group, a portfolio of brands, other brands than the H&M brands and ventures. They help us to read a wider range of customers and cater for other diverse style preferences that we don't cater for within the H&M brand.

ARKET and COS performed strongly last year, and we are really excited about their future potential of accelerated growth. We're also happy that our secondhand platform where we are a majority owner, Sellpy has continued to grow at a very high pace.

It is today one of Europe's largest secondhand players, and it's available to customers across 24 markets. In 2024, it's also been important for us to be focused on what matters the most for our customers.

This meant that we decided to discontinue Afound. It also means that we, during 2025, plan to integrate the Monki offering into our Weekday stores, both in stores and online, as Adam previously mentioned.

Looking into our growth plan for the coming years, we see that, that will be driven by continued growth in the digital channel as well as an improved growth contribution from our physical channels. So to continue the positive development that we have seen throughout 2024, but especially in the fourth quarter into 2025, we are continuing to develop new functionalities like the ones I mentioned previously.

We are extending the upgraded shopping experience to more markets and wider across the globe, but we also look for opportunities to extend our reach through external platforms. And this year, we opened a number of those external platforms.

We opened on marketplaces like Duoing and Pinduoduo in China, Trendyol in Turkey and Ajio in India. Looking then at the physical store portfolio and the potential for growth, we plan for the openings, closures and optimization of the physical store portfolio to gradually support our organic growth.

Last year, H&M launched its first stores in the Dominican Republic. And this year, we will open, as you know, in Brazil towards the end of 2025.

Our ARKET brand will open its first stores in Norway, Austria, Greece and Ireland. So in total, during 2024, we opened 88 new stores.

We decided to close 204, and we refurbished 242 of our stores in the total portfolio. In total, the effect of closures, openings and refurbishments were slightly negative on top line sales development for the total year 2024.

Looking into 2025, we plan to open at least 18 new stores. We plan to close 190 stores, and we plan to refurbish around 190 stores as well.

In total, we expect this to give us a neutral or slightly positive contribution to sales for the full year. To improve the growth contribution from the physical store, we will prioritize initiatives that support like-for-like growth in our physical store portfolio, such as tech solutions for improved product availability for relevance of the product, but also to improve the customer service through improved tech support to our store colleagues.

We also plan to extend the experience upgrades that we mentioned previously to a wider scale and to more stores throughout our portfolio. Overall, we decide and we prioritize the investments where they make the biggest impact, and that is for us the physical store.

We have more than 4,200 stores. So upgrades, optimizations will continue over a long period of time.

To summarize, we see great potential for further strengthening our organic growth. And with that, our strong commitment to sustainability also continues because we want to use the scale and the reach of the H&M Group to lead the transformation in the fashion industry towards a more sustainable future.

Last year, we made strong progress in the area of sustainability and specifically focusing on our most important goal which is reducing our greenhouse gas emissions and increasing the use of recycled and sustainably sourced materials in our collections. The progress we have made last year is the result of better integration of the sustainability efforts into the business targets as well as being very focused on targeting our investment towards the decarbonization of our supply chain.

For 2024, our preliminary results show that our Scope 3 emissions have been reduced by at least 23% compared to the base year of 2019. We have also been recognized in several rankings for highlighting the work that we do and the leadership we take within sustainability.

Two examples are the Stand.earth ranking or the Dow Jones Sustainability Index. More about this and much more about the work that we do around sustainability will be published in our annual and sustainability report that will publish later on this spring.

So last, but absolutely not least, looking back into 2024, one of the achievements that I'm most proud of and most excited about is how well our teams have come together across our different markets and delivered on one common strong direction for the group. This we have done at the same time as we have simplified our organization to be quicker in decision-making to support speed and quicker progress on our plans.

The passion and the enthusiasm and the dedication to this group that I see when I visit stores, warehouses or offices is one of the things that gives me the most confidence about the future and where we're heading as a group. So with this said, let's give me a brief -- let's give you a brief outlook on 2025 and what we can expect to see in 2025 from the H&M Group.

And we will start that outlook by looking at what makes the most difference for our customers, meaning products and assortment. So this is part of what you were able to see looking at the spring 2025 from H&M.

We will have a strong spring campaign continuing to build the partnership with music and culture and exciting events. You will see a fashion circled around tailoring.

You will see a fashion around neutrals, buttery yellow. And you will also see exciting new take on a preppy style.

Then coming into 2025, we will also have a collaboration with Glenn Martens. Glenn Martens will be our next guest designer.

He is today the Creative Director of Diesel, and he was just announced as the new Creative Director of Maison Margiela. Looking into 2025, not from a customer lens, but from a business lens, we will continue our focus on organic growth.

H&M and the H&M brand will remain our top priority. The strategic focus areas around an elevated product offering, an elevated shopping experience and elevated brand building will be accelerated further.

To go a bit more into specifics, what we will do is we'll use the successes that we have seen in H&M womenswear and spread them across all our customer groups. We will continue to push forward on the upgrade of our store portfolio and further develop the functionalities in our online store as well as roll out our new digital experience to more markets and wider.

We will continue to invest in marketing to build a stronger trust in connection with our customers and build deeper relationships with our customers, mainly through digital media investments and influencer marketing and collaborations with influencers and creators. Last but not least, we will also, while we do this, maintain the strong and effective cost control throughout the group.

Looking at the world that we will play in and the H&M group will play in 2025, we recognize that it will be continued challenges from both macroeconomical conditions, but also obviously, geopolitical uncertainty and instability. As I mentioned before, we have continued to diverse and create a more flexible supply chain for us to be able to act quicker and mitigate any external impact that we will have on different markets.

Combining the increased flexibility and the agility in our supply chain with our commitment to really offer fashion and quality at the best price in a sustainable way, we believe this gives us a lot of resilience and position us strongly moving forward and looking into 2025 and beyond. So to sum up, we are almost done.

We have a unique opportunity in the sweet spot of fashion, affordability, quality and sustainability, and we believe that becomes more and more important for the consumer. We have set and built a clear plan for the years to come, built around the purpose of liberating fashion for the many while at the same time driving profitable long-term growth.

And with strong finances, as Adam spoke about, with a committed long-term owner and with a clear direction and very committed colleagues, I'm confident in the potential of our core business and the focus that we have put on organic growth moving forward. So thanks to the dedication, the passion from all our teams across the globe and a strong strategic plan, I'm confident that we'll take important and significant steps on our long-term journey looking into 2025 and beyond.

Thank you. Then I invite you back on stage, Joseph.

Thank you so much, Daniel. I think that was a very helpful presentation of the growth journey that we are on.

And now thank you for listening to the audience. It's time to take your questions.

So we'll begin with questions from the room followed by those from our online participants. So kind -- please remind you to state your name and ask one question at a time in the microphone provided by our colleagues.

And if possible, please ask the question in English as well as we have an international audience. So first question to Andreas.

Thank you and thank you for not calling me [indiscernible] as your predecessor did. Anyway, working cap, the receivables as of Q4, is that only a Black Friday effect?

And how do you see working cap requirements into 2025 and beyond?

In the receivables, you see the effect of sort of having order placed but not yet delivered and paid and booked as selling and also -- so that's the increase you see. On the working capital, of course, the core component is the development of the stock.

And here, we do have challenges that we need to handle within the supply chain, but still firmly focused on achieving the long-term target of having a higher stock productivity than we currently have. We have had to make these adjustments now to the purchasing plan in order to ensure then that the customer can actually find what we're looking for.

So unfortunately, we are a little bit bound by external conditions here.

CapEx side, you guide for SEK 11 billion, SEK 12 billion in the same [indiscernible]. Can you be more concrete where you're planning to invest the money?

And if -- whether you have a measurement, whether an investment is a success or a failure, and if so, what is that?

I will start and then Adam will fill in. And so the main investments will be again towards the store portfolio, both in optimizing by opening, closure, but also then refurbishing to create a relevant experience for the customer.

Secondly, we'll invest into the supply chain to be more flexible and agile, but also improve availability by increasing the omni availability for our customers and improve the precision in stores with RFID technologies. That will be an important part of the investment.

And then we put investments into improving the product, both quality and pricing, but then also, of course, investments into tech developments. And what we have done through this year, which has been an important work is looking at the totality.

There are so many good ideas. There are so many initiatives, and it's been important for us to scrutinize and be sharper in making choices and prioritizing the ones that we think will be -- pay off the most.

So that's the reason why we have decided to close some of the ventures and take a decision to consolidate Monki into Weekday. So that hopefully answers your question that we are carefully monitoring, which are the cases that we believe the most in, and then evaluating whether they pay off the -- satisfactorily or why not?

Adam, do you want to...?

I think one more. One last for me, if I may.

Gross margin, you talk a lot about the negative effects of certain factors, et cetera. It must have been something really positive.

You talk about the improvement work in the supply chain. Can you be more concrete on that topic and how do you see that into 2025?

No but there are three main components to the gross margin. One is sort of the external factors where everything from raw materials to shipping costs.

And those are the ones that we call out, for example, the transportation costs have gone up through the year affecting us negatively. The other one is the investments into the product, as you mentioned, that, of course, then also puts a strain on the gross margin.

On the reverse, over the last couple of years, we've had intracompany adjustments that have affected the gross margin. Two big reasons that we had a -- of course, the business in Russia when winding that down, we needed to close those positions affecting the -- some of that affected also the gross margin.

And then we spoke about the VAT position that we've had in Mexico. Those types of effects are not desirable for us.

So we worked really hard. Obviously, Russia is behind us and also to clean out those sort of outstanding internal positions that causes this somewhat unclear effect on the gross margin.

So looking forward, we don't foresee that, that component will be as big as it was in Q4. But while saying that, then the two other ones remain the external factors that has a drag and then the conscious investments into the pricing.

On the other side what has supported then the gross margin development for the fourth quarter is that there's been a long-term ongoing strong work with -- in our sourcing, in the production markets by consolidating suppliers and getting better long-term relationships with the suppliers, which has supported gross margin and better work with the materials and the components in how we source and consolidate materials and components, and that's also given support. In Q4, we get the boost by the effect that you described, Adam that you described with the shift of reductions moving in, but also that we have seen a better sell-through on womenswear, so we've been able to not take as much reductions in Q4 as we had anticipated and had a better sell-through on full price.

Magnus Råman of Kepler Cheuvreux. I'd just like to linger here on the markdowns question a little bit because I think in the report, you write that you expect an increase in markdowns in Q1, whilst I think here on the call, you said slight increase.

And normally, you mentioned slight as perhaps 50 bps or so. But how should we view the anticipated markdown increase from pushing forward Black Friday into December in Q1.

Is it a big increase or a small?

So there is a technical component connected to the timing of Black Friday, which is increasing the markdowns in Q1 compared to last year, all things equal. On top of that, Adam, commented that there is a slight increase in markdowns.

So two components here leading to an increase in markdowns year-over-year.

And then on marketing costs, you mentioned the SEK 600 million you deem extraordinary in Q4. And you also said that you expect additional sort of extraordinary marketing investments in Q1.

But will they -- do you anticipate the size to be similar or smaller in Q4?

Somewhat smaller so still fairly ambitious, but not to the extent as in Q4, that's our expectation. So sequentially, a lower amount than in Q4, but compared to Q1 of last year, it's an increase.

But you say somewhat. So if it would be half, it would not be somewhat?

That's semantics but somewhat half.

And then just a final one here. On online, you mentioned strong online sales, that's positive.

But I think in terms of the profitability of online, it's a very important trend. We see how many pure players are beginning to be -- cut back on the generosity of delivery terms and return fees.

And that's what I wanted to ask in terms of your pilots on implementing return fees. How has that played out?

And what's the rollout plan for return fees?

So we see a benefit of having both channels because we can offer the customer to return and interact with us both in the physical and in the digital store by not being a pure player. So with that, we see an opportunity to roll out more return fees because for us, it's beneficial to get the returns into stores.

It's also beneficial for the climate and the environment that the returns are not being shipped. So with that said, we see positive outcome from the pilots, and we intend to accelerate the rollout at now a high pace for return fees because we see the benefits both of customer plan and our business.

But it's important to know you can always return as a customer for free in our physical stores. There's always the option to do free returns in the physical store.

Daniel Schmidt from Danske. A couple of questions from me as well then.

You seem very happy with the performance of womenswear in the past couple of quarters and especially also Q4. And I appreciate sort of laying out the text a bit like you did today.

But could you give some more sort of hard facts, how much is womenswear growing in Q4, for example?

We don't call out individual concepts beyond what's in the report. I think the important thing to stress is the success factors in balance where we see big opportunity to take and integrate across the different customer groups as well.

To put it the other way around then, what is sort of not working when it comes to men's and kids and so on, which you don't mention today. And clearly, they are probably sort of having a negative sales development, as I understand it.

The brand and the group is acting in a very competitive market. So you need to sort of making -- need to make enough good improvements competitively to gain market share and stand out from your competition.

And I think that's where we have accelerated the work quickest on womenswear and done the things that have equated the biggest resonance and the biggest effect with the consumers. So that's why they are ahead when it comes to the progress.

But that's something that we're working really hard and dedicated with all teams on, including menswear, kids wear and so on.

And looking forward then, do you see a more even spread in terms of your efforts between the different segments of your sort of collection?

It's been a conscious choice to also start with womenswear and put the most emphasis and focus and effort in investments to sort of regain the confidence and the trust from customers. Our industry is run by the female customer.

She decides to a large extent, what to buy for kids and for her family as well as sometimes for her partner. So it's important to start there to win the credibility by winning her.

So when we have steered investments, capital allocation resources, we have put a lot of emphasis on starting by being successful in women. We believe that lays the foundation for them being able to also accelerate the other customer groups because increased trust for the H&M brand, a stronger platform of customer relationships would also help us build the full and leverage the full portfolio with fashion for your family, for your partner or for your home or for when doing sports.

So it's the reason why we're moving is also a outcome of making clear priorities of where we put the biggest focus first.

And then maybe a second question for both of you. I think, Adam, you think you mentioned, maybe I got it wrong when it comes to marketing that you said that it will be the same number as in 2024.

Maybe I'm misinterpreting you or not. And correct me if I am.

If so, does that mean that you think that you will reach sort of the full effect of what you want to get to by the end of Q2? Or sort of how should we view your budget when it comes to marketing spend in '25 and what you want to achieve?

Efforts on a relative basis will be higher in the first half year. So that's a correct interpretation.

And then we -- obviously, marketing is something you can plan at a very late stage. So we're also of course, evaluating each of these big drops, do they make the difference we anticipate?

Do they move the perception of the female fashion customer and so forth? And then we plan.

But sort of the shape of the year is in line with how you assumed it to be.

We see a good -- we are really happy with the outcome of combining fashion and music as a way to portray our collections and get customers excited about our collections. We'll continue to do that in both spring and in full building on the learnings from what we did this fall.

But as we said, every time we do it, there is a great opportunity to learn what's paying off and what's not paying off and how can we gradually steer then the investments to what makes the biggest difference.

Do I get you right that sort of as you plan now, and that could change, of course, as you get to the autumn this year, marketing will likely flatten out or will it be down or sort of?

We believe we can create the same effects with, as Daniel said, being more efficient in how we do things. We took away learnings from the autumn.

So on a relative basis, we see that we invest more in marketing in half year 1, and then we evaluate how to look into half year 2. But as the plan sits right now, we think we have the relative increase in the first 6 months rather than in the latter half.

Niklas Ekman from Carnegie. Can I continue here on the womenswear and the turnaround that you see?

Because given that womenswear is your biggest segment and where -- if you look at the actual group sales figures, you're not seeing a significant improvement except for very easy comparisons. So what would you say -- I mean, what evidence are you seeing of womenswear working?

And what do you think needs maybe to be fine-tuned here going forward? Do you need to make significant adjustments going into 2025?

Or are you happy with the initial results that you've seen?

To be clear, we are happy with the receipts we're getting, that driving the sales is being driven in the right places. So where we have put the focus on, where put the emphasis and where we believe we've come the furthest in raising the bar and increasing the ambition for our customer offer.

That's what gives us confidence looking at the outcome what's driving the sales. We are not satisfied on the total.

We believe H&M has more growth potential than what we have seen so far. And we believe with the learnings on the first receipt extending that to a larger part of the portfolio to more of the customer groups, we can accelerate growth moving forward, and that's what's in our plans and the focus for all our teams working here.

I don't know if you want to?

Can I also ask about the long-term targets? You removed the 2030 target, but you're now saying 10% sales growth and a 10% margin.

Can you give us a horizon, when do you think that this could be achieved? I guess it's going to be difficult in '25 to reach either of those targets when you're still not closing stores.

But what do you think is the horizon and maybe in particular for the 10% margin target?

So here and now, we are really focused in leveraging the full potential of the organic growth potential with the highest priority on the H&M brand, and that's where we will put the emphasis and the focus here and now to really leverage those opportunities. And that is we see great opportunity for growth in like-for-like improvements through the assortment improvement, through the experience improvements that we talked about.

Continued acceleration of the digital channel, where we have seen really strong receipts coming out of Q4 and then as well as now shifting from a negative impact of this portfolio optimization to a more positive that we see potential to accelerate over time. So we believe, looking at the world around us with our positioning and where we are, there are opportunities for long-term growth that goes beyond the numbers that we see today.

We also see a steadily improvement in the profitability by getting growth while having really solid cost control while we believe we will take steps towards the 10% profit target. That we will not guide on a time-specific basis.

We would say that that's our ambition, that's what we're striving for but we don't give it guidance on time.

Can I rephrase it a little? If we imagine that sales don't improve significantly, can you still reach the 10% margin target in, say, 2, 3 years?

The components are, as we've been speaking about before, the normalized gross margin we take in one step this year. We think that over the full year, we have more potential, even though there might be some short-term effects negatively.

So that is then a fairly sort of sales size or sales level neutral. But in order to get the full effect, we also need the SG&A leverage from increasing selling.

We are working in a tremendously, as you said, competitive environment. We are also seeing inflationary pressure.

We see salaries around increasing. So we need that engine, and that's why our ambition is so clear to focus on where we create the most value and that is driving sales now on a solid and healthy cost base as we could throughout 2024 with fairly slim sales increase that we still manage them as a percentage to increase profitability quite a bit.

But in all levers, more potential.

So we have one more question from the room before we invite the online audience.

Yes. Daniel Schmidt from Danske again.

There's so many moving parts in Q4 when it comes to the gross margin, would you sort of just single out Black Friday, how much of an impact was that in Q4? How much will it be in Q1?

Just so we get some clarity.

So on the gross margin impact.

The shift on Black Friday.

From Black Friday, it impacts the markdowns. So that was one of the key reasons why we could come in below last year's level on the markdowns.

The other component was that we could drive more full price sales than anticipated, especially in the store channel where ladies' fashion sold at full price in a stronger way than anticipated and looking back to the well received ladies fashions.

You don't want to separate and give us any number in terms of sort of what the shift effect is basically between the quarters?

No, we don't have a number to share on that.

Thank you for the questions from the room. Now I'd like to invite the operator and see if we have any questions from online?

Thank you for taking my question. Apologies it's on the gross margin again.

I have a couple on that metric, please. Just on the remeasurement effects on the gross margin, I just wanted to clarify my understanding.

So my understanding is there were negative effects last year, which did not repeat and, therefore, had a beneficial year-on-year impact. But the base is now in the right place.

So first of all, can you just clarify that correctly? Second of all, please, could you provide a magnitude on that because it's something that's extremely difficult to estimate from the outside in.

And so just to understand your underlying gross margin progress, which is obviously key for understanding the progress in the business that would be incredibly helpful. And then second -- or third rather, did I hear correctly that you expect the gross margin to be up year-on-year in 2025.

And if so, is the key driver of that supply chain, that sort of ongoing supply chain consolidation and so on? And is that something that is effectively locked in already in terms of your negotiations?

If I start with the long term maybe and then maybe Joseph can dig into the short term. But as we said, and we are committed to take the gross margin back to what we call normalized levels, and we still have some way to go.

Obviously, as we always say, there are factors outside of our own control that affects this. But we believe, and you highlighted it well, Daniel, that we have done vast improvements in how we operate the supply chain with consolidating the supply base by now starting to work more effectively and efficiently with components.

So we think that we have of the things we can affect ourselves, potential to continue to improve the gross margin. Then to what level, at what time, that's more difficult to assess.

But the ambition and the levers are there. So that's sort of the long term for the full year, we see that we still have potential to take steps, strengthening the gross margin.

Joseph, on the short term?

Yes. So connected to the remeasurement effect and how it's impacting the years, we did have a negative significant impact back in 2023 from the remeasurements on receivables.

This year, the effect was in the other direction, but a small positive. So the net effect here in between the year gives a significant now tailwind when comparing this year's reported gross margin compared to last year and sort of ranking the relative effects of all these moving parts.

There's always a lot of moving parts, but this one is the second biggest overall.

May I just follow up with which is the first biggest then, please?

That is the investments in our product offering. An improved quality at attractive prices for our customers.

Can I ask a question, please, about the selling and admin expenses growth. I think it was 2% underlying in Q4.

Just wondered what you're expecting for the coming year, particularly the first half on that line? Any sort of special effects we should think about there?

No, not apart from what we mentioned regarding the marketing. So that is one effect.

Otherwise, we, as Daniel also said, that we are pleased to see that we've been able to handle and mitigate a lot of the inflationary pressure in our business, and that's our expectation and our ambition to continue to do that. So keep cost increases to a minimum and take costs then from what doesn't sort of enhance the customer experience and move them towards what does.

And here we believe that the marketing efforts is a wise investment into strengthening our position and as a brand.

And then just one more, if that's all right. On the outlook for freight costs, I know you're still seeing extended transport times.

What are you expecting or what are you seeing in terms of the freight cost outlook at the moment? Or will we have to wait until later this spring to get a firmer view on that?

I think we need to wait. We are, of course, assessing the situation.

There is a big unknown in how the situation around the Red Sea will evolve and that will sort of free up or not free up capacity that we believe will have a big impact on freight costs. So we are already in dialogue with our partners, and we need to come back to that, I would say, Q1 report in March, then we have better visibility how it all plays out.

My first one would just be on pricing. I think you spoke there about the investments you made in pricing in the H&M offer recently.

Now looking at where you sit today in H&M's pricing positioning, how are you thinking about further price investments looking into this year? And then my second one would just be on your overall product and the strategy outlined, is there a way to think about where we are in terms of the overall product journey, whether it's a proportion of how much is now done on nearshoring or a portion of the products within womenswear that you're happy with in terms of the brand elevation you're trying to achieve and just how much further we have to go there?

So if I start and Adam will continue. When it comes to pricing, for us, it's really important to make sure we always offer the best combination of fashion, quality and sustainability at a really competitive price to sort of be in the sweet spot of affordability and fashion.

And that's what we monitor on a country basis, on a geographical basis, but also per customer group and on the competitive development. So that changes, and we are taking action continuously.

We have made a conscious decision to invest in improved pricing, but also improved quality. Throughout the year, looking ahead, what we see is we will continue to be very closely monitoring the development of the competitive situation to make sure we always offer the best combination of fashion, quality and price.

But we also see that with an elevated product offering, with elevated experience and with a stronger brand, we can sell a wider range of products, which opens up for offering a wider, more exciting, more elevated assortment for our customers, which also opens up to a wider price range, which is an opportunity for us that we see. So I think that's how we are thinking about pricing.

Adam, if you want to fill in?

I'm not.

And when it comes to product development, we believe we are taking big steps in womenswear. If you go into a store today, especially if you go into our online site, we are really happy with the expression, both of the elevation of the products, but also on the products themselves.

With that said, it's a positive spiral. When you start to develop great products, you get even more relevant receipts from the customer, you continue to push the ambition level.

There is a positive energy of self-confidence in our creative teams which allows them to further increase the ambition. And we find exciting ways to do it.

We are really satisfied with the outcome of increased near-shoring capabilities. We are really happy to collaborate closer with some of the best suppliers in the world, which helps us to further reach -- push the bar.

And we look -- for us, it's important to look for womenswear as the next step, but we look at the full sort of time we spent in developing a product, everything from trend detection to idea generation through product development, through sourcing, through shipping and want to shorten that totality because that makes us quicker and more relevant. So that work is still a lot of potential ahead of us on womenswear.

And then as we said, we see a lot of these learnings that are leveraging, that we are leveraging in womenswear also to be relevant for all our customer groups within the H&M brand. So we have come far on womenswear, but we believe that there is a positive momentum that we can continue to build on even on womenswear.

It's two for me. One, sorry to come back to the gross margin one more time.

But I just wanted to understand when you would expect the kind of current U.S. dollar strength to start feeding through into your gross margin in terms of the dollar sourcing?

Is it right to think about that feeding through over about 6 months. I'm just conscious that you're already guiding to negative external factors in the first quarter.

And then the second question I had was just on the 2024 impact of space. Obviously, you closed net 100 excluding Monki.

Just wondering if you could give us a sense of the impact that actually had from a space perspective. Is it 1% to 2%?

Or are those stores already anyway, quite small or unproductive and so the impact on 2024 was smaller than that?

Should I start on the first question then with the currencies. We've seen a strengthening of the dollar since October-ish.

That's where we see the biggest movement. And we usually say it's 3 to 6 months before it sort of trickles into our purchasing.

But also to be -- to remember that usually, the strengthening of the dollar has the opposite effect in -- when we purchase. We pay salaries in local currency.

So it's not so easy to say that it's -- all of it is bad. It's a mixed bag and how we handle it.

But generally, one can say that the strengthening started throughout October and there's a 3 to 6 months sort of deployment into effect to our prices.

Yes. And I can start to elaborate a bit on the question around Monki and then, Monique, if I didn't answer your question fully because the line wasn't very clear, you can fill on with an add-on question.

But basically, the -- if we take the 2024 impact of the closure -- or sorry, on portfolio brands from the changes connected to the Monki brand, was that portfolio brands excluding Monki and Afound grew 5% year-over-year compared to plus 1% when then including the effect from Monki and Afound. So there was a clear negative impact on the portfolio brands from this change during the last year.

If we look at the store portfolio impact from the planned changes to the Monki store portfolio in 2025, these changes are included in the 190 stores that we guide to close in the year of 2025. And the total impact from openings and closures and rebuilds to Daniel's earlier point, will be slightly positive to sales year-over-year compared to last year when these portfolio changes had a slightly negative impact.

So this is a gradual improvement year-over-year that we plan to continue to strengthen over time. So did that answer your question, Monique or was there some specific detail that we missed?

The other thing I was trying to understand is ex what's happened in Monki, so just the underlying store closures in 2024, what was the impact on space of that as in I can look at the number of stores that have closed, but presumably, the stores that have closed might have been less productive than the normal stores.

Yes, when we decide which stores to close, we target the lower performing tail or end of stores. So with the combinations of openings and closures, we can move the space productivity up then on the square meters, et cetera, that we open and close, that's not highly correlated to this.

We can close large-space stores that don't have as much selling and relatively low profitability. So that is a good way of addressing and improving the store portfolio.

A couple of questions, and I'll start with the first one. Q4 sales were obviously a little bit softer in the rest of the quarter versus the exit rate, which I suppose could question some of the effects of the new collection.

And the Spring/Summer strategy sounds very similar to the Autumn/Winter strategy. Have you changed anything into Spring/Summer versus Autumn/Winter?

Or did you learn anything that you perhaps wanted to change into Spring/Summer?

I will start. And I think it's important when you look at sales numbers on a short-term basis, as we mentioned before, they easily become affected by external effects like weather, and we know we had a very favorable weather in the beginning of the quarter that boosted sales.

Then with that said, we have learned a lot from the fall that we're bringing into the spring. One learning, for example, is to make sure that we keep the interest alive for longer.

We saw a really high customer consumer interest in the collection, and it lasted for quite a short time. Now the spring collection will drop in two takes to create a longer phase of excitement.

So that's a major shift, then we will also see a lot of learnings in how we do events, how we get the biggest outcome, how we invest in stores, how we leverage the digital, so a lot of things to be learned. But as we said, one of the things that really paid off was the partnership with influencers and other creators so that we will continue to leverage with an even greater effort going into the spring fashion campaign.

And the second question is on gross margins. Obviously, if we think about your 10% operating profit target, the last time that you got above that, the gross margin was 2 or more than 2 points higher.

It'd be helpful to understand kind of a rank order of the levers that need to be pulled to get that 2 points of gross margin expansion over the next few years.

Well, I can start, as we say, then a lot is how we handle our own supply chain. We believe that is a big contributor.

We've taken big strides during 2024 to improve our own way of working with the supplier, consolidating, creating closer partnerships. Now we're extending that effort to a big part of our product cost is from the materials.

So we're now moving that effort down to what we call the Tier 2 supply chain. On top of that, of course, you've seen the elevated freight cost, and we believe that we could see that opportunity towards the end of the spring that they might be slightly more favorable.

But I think ultimately, it's about having the right product at the right price continuing to ensure that we sort of charge the product with so much value, so much fashion, so much quality that we can manage to full sell at a higher share of full price. So that's sort of the third level, both managing pricing, as you said, Daniel in a wise way, but also ensuring that we can sell a higher share at full price.

So those 3 in combination are 3 levers that we believe we -- not potentially aiming for the full 200 basis points that we said will take us towards a more long-term normalized gross margin.

Maybe a couple of follow-ups to the questions previously asked already. On the pricing, are you able to help us in terms of the quarter gone, 3% sales growth.

What was the contribution from pricing to there, please? And was there anything that you could help us there?

And how we should think about that moving into 2025? Secondly, Adam, I think you referred to a normalized gross margin several times a day.

Is it the Q4 level of gross margin that you see as normalized level? How should we think about what is a normalized gross margin, that would be helpful.

Finally, also, I think you've talked quite a lot about full price sales mix focus. Can you perhaps explain to us where that is running?

Or maybe just how much it's improved in Q4?

So I'll start with the gross margin and the normalization. We believe that we've taken a big step.

Gross margin is a big driver of the profit improvement this year, but we're still connected to the previous questions. If you extend it to sort of when it was the highest, we still have some way to go, but we think that the normalized level is somewhere in between that.

So we aim for continuously strengthen the gross margin by having strong collaborative efforts towards our supply chain, ensuring that we have an assortment that creates pricing power on our end, so we can ensure that we can sell the right product at the right price and also then through the effort in our supply chain with efficiency and the flexibility to reduce reduction. So I think the normalized -- we're not fully there, but I wanted to signal that we have our eyes set on it, and we've taken big strides this year.

But still there is some more potential we see that we could work on our end. And then we, of course, need to relate to how the world changes and what external factors comes our way.

Should I start a bit on the second one around the full price focus. We have, as I said, had a clear full price focus.

We have come down in reduction across the concepts. We're particularly pleased with the full price sales development of Ladieswear.

And I think I'm really excited also to see that we do really well on the higher range of price points in our assortment. So we see good growth on mid-price and higher price points in the selling development year-over-year.

So I think that's a receipt that we increase our ability to really demonstrate the value of our offering and have well-received collections from the full price offering we have.

On the pricing and then please, as it relates to the 3% sales growth in the quarter?

So we still sell at slightly lower average prices, as indicated previously towards the end of 2024. So it's a volume-driven growth.

Not linked to the investments we did in pricing and in the customer offer that is still playing into Q4. At the same time, we see, as you mentioned, better traction in higher-priced categories parallel.

And sorry. And as you look into '25, is that sort of slightly lower pricing continues through to first couple of quarters or through the year?

How do you see that?

We see that we continue to invest on always having the best price, which means that we continue to do certain investments in like-for-like, but we see that we gradually will have a bigger opportunity to leverage the wider price range, so we will get more support in selling by having price contributing to the growth towards the later part of the year.

And we see the link, obviously, with strengthening the brand efforts we do within marketing that enables us to create more value and perceived value which sort of strengthens our pricing power. So we see this as not a separate question.

We see them -- I think the linked questions with the focus right now is to elevate the brand, and we believe that long term can strengthen our pricing power. So there's a short and long term to this as well.

A couple of questions, please. Firstly, can you give an idea of the sales uplift that you're getting from your refurbished stores?

Refurbishing 200 or so of these a year, I'm assuming there's a good payback on it. Just any information you can give on that would be great.

And secondly, can you just confirm this point on -- you've got lower average selling prices, but you're seeing more traction in the mid and high price point areas. Why would that not be increasing your average selling price, if you are performing better at the higher price point garments.

And just more philosophically, do you think that the market is less competitive at that mid- to slightly higher price point than at the low end? And is that the direction for choice that you'd like to take the brand over the coming years?

I think I can just clarify the data shared on the previous question here, why the strong performance on higher price points for the ladieswear offering is not driving up the total. I mean we do also see a good development on the overall ladies offering.

And as mentioned, the comment was made connected to the ladies where we see particularly strong receipts on mid and high prices.

And we also need investments into more low price and into like-for-like lower prices during the last quarter. On the more philosophical or strategic question, we believe competing only on the lowest price is a very difficult position to take, especially if we want to transform the industry towards more sustainability.

So what we -- exactly like Adam said, are aiming to do is to charge our product offering with the most exciting elevated products, but also the experience and the brand plays an important role into charging our products with value. And that allows us to compete on a wider range of product categories and product qualities.

And that we believe is a strategic important potential for us to explore moving forward. But of course, that raises the bar on our collections, on our stores, physical and digital as well as on our communication.

And that's why we believe it's really important here and now to focus on the organic growth to be able to raise the bar and provide that sort of elevated competitive customer offer.

Should we take the question about the refurbished stores selling uplift as well? Should I start on that?

Yes.

So we do see that the refurbished stores really gives an improved customer experience for the key target customers. So we excite around the presentation of the product and the whole experience breeds fashion.

So we are really happy with that. When it comes to the selling effect, it really depends on -- by location on the difference in experience compared to before, but also how we work with introduction of our new concepts, which is really helpful and demonstrates the good ability that we have and the value and the breadth of our full offering.

So when -- for instance, introducing new lifestyle concepts to the offering, we see really good effects, and we often try to take the opportunity when doing a refurbishment to make the -- all the necessary layout change and offering changes. And to complement, when we look at the refurbishments, we have done, there are also pieces of that we think -- that we believe are really relevant for the full portfolio that can be layout changes, optimization of composition of the assortment or it might be tech improvements to support availability through RFID technology or tech to support the customer service.

Those, of course, we want to spread to a wider portfolio, which we talked about in the customer experience upgrades. I think it's important to not just look at the portfolio improvements as just the refurbished stores, and they are the only ones driving.

I think there are a lot of developments that we can spread to a wider portfolio to drive like-for-like sales growth. And in our CapEx plans for this year, we have in our plans to make changes to a significant share of our portfolio with these customer experience upgrades and technological solutions that will give advantages to our customers.

Actually, that answer you just gave follows straight on to my question, which is on CapEx. How many stores will receive that wider impact you lay out in tech this year?

And why don't you accelerate CapEx rather than keeping flexibility for a share buyback? Isn't it important to get around the whole estate to avoid it slipping into perhaps a portent to the past?

That's my first question.

Should I start then? We plan to refurbish a fairly high number of stores this year.

But as Daniel said, we're also then strengthening other parts of what the customer will experience as a better store with greater availability, and that will be further investments to towards RFID technology. And that then in combination with layout changes and all, we think that we can touch a lot of stores without sort of calling it a formal refurbishment.

So sometimes it's a little bit difficult to say that how few or how many do we actually affect. The assortment goes to all stores.

We have high ambitions on the continuation of improving our rollout of RFID and then also more sort of concept changes that are more -- potentially seen as experience upgrades rather than full refurbishments. On the sort of CapEx guidance, we believe that we have a plan, and it's connected to, I think, the first question here that how do we then manage to steer our CapEx where it creates the biggest return?

And have an approach that we, of course, need to lead the change we see in sales trajectory and profitability by the product. So in all markets, we expect that turnaround to happen.

And when we see good signals of that happening as we do in many markets, we then sort of follow up with the full refurbishment program in order to ensure that we have the returns needed to sort of get around the full store portfolio in due time. But for us, it's a different approach and a different market, and it comes with an overall approach that it should be product-led, the turnaround now and then we follow up with strong investment cases to ensure that the customer experiences the whole upgrade, both from the product as well as the physical store experience.

So with that in mind, my second question is what's the timing and the sequence of making improvements to men's and kid's wear. How quickly can we expect to see those come through?

We expect to see significant improvements during 2025. The team is fully focused on product as priority #1, #2 and #3 and then experience and brand, as we said, but really putting the focus on products.

So we have big ambitious plans, strong committed teams that are exploring the learnings from womenswear, integrating it into the kid's and menswear offer as we speak. So we believe we will see shifts already during 2025.

Firstly, how do you assess the underlying success of your investment in assortment and customer experience in the context of this kind of significant extraordinary marketing? In other words, how do you attribute the kind of strong womenswear performance between the organic pull of the elevated offer and the inorganic performance of higher marketing?

Sure I'll start. We measure a lot of things.

One of the key things we measure is, of course, a preference and how preferred is H&M and then the H&M Womenswear as a first choice of destination to go shop fashion. So these are sort of the customer-centric measurements we look at when we evaluate whether the targeted audience, the modus operandum connected to, was it influencers or was it concerts that we looked at and also how it all connects to both the product and the customer experience.

But at the end of the day, it should lead to higher selling and higher profitability from my end and all of our ends. And that is also what we call out here today that ladies is driving the sales right now.

So we believe we have the tools to measure both on the customer side, the preference and the softer measures, and we see the receipts on the sales trajectory for ladies. So that is what gives us confidence and reassures us that we are on the right track.

And the logic is for the customer product is what matters most. That's why customers come to us, that's why they sort of cherish us, that's what they talk about.

So we have to secure the product that that's really outstanding first. And then investments into marketing, that's a long-term effort to over time, build a stronger base that we can leverage that product on, but there's no point in doing it unless the product is really competitive.

So that's where it starts. That's also where we see the biggest improvements are directly related to product improvements.

And the second question were on nearshoring. So just to confirm the kind of level of nearshoring you are at now, how that might evolve in the next couple of years?

And then kind of adding on to that. Are you seeing -- is your nearshoring capacity disproportionately serving the higher fashion womenswear where you're seeing some success?

Any color on that would be appreciated.

So near shoring is one important piece of the puzzle. What we look at is how do we shorten the entire lead time for ideation, trend detection to that the product is actually on the shelf meeting a customer.

And nearshoring is one component that increased flexibility and can potentially increase speed, but we are looking at the full flow on the full processes and the organizational setup and the partnership with suppliers to shorten this full lead time to become quicker and more flexible. And then nearshoring is one of those components and it's a point that we have increased, but we're not sharing the exact share of nearshoring.

We believe it's importance is the shift that we are making in the full lead time. The efforts that we have done to shorten the totality and be more quick to react to trends and more quick to work through this flow are happening across the customer goods, but predominantly within women's wear and especially within the higher fashion categories where we need to be quicker to react.

When it comes to basics and other garment types that we have high predictability on, we can work with longer lead times, more predictability, using AI ML models to predict demand and be more -- and use a different sources of supply chain, the really quick supply chain we show we use and we invest for the fashion and especially womenswear.

Just a follow-up. I just wanted to double check.

I recall that last year, you had some accelerated depreciation in the OpEx number that was larger than normal relating to stores that were not necessarily expected to be profitable and so on. I think it was around SEK 700 million of sort of one-offs, if you like, in Q4 in total.

Am I right in a very back-of-envelope calculation, that the number this Q4 is closer to SEK 100 million. And if I've got that completely wrong, could you just provide a bit of color around the magnitude of that this year, please?

You've got that completely wrong. Note 4 of the report.

I think it describes it really well. So we worked with clarifying this.

On Page 28, you can see how it played out for Q4 and the full year. And you can see, as we estimated last year with stronger sales, with better profitability in the stores, the need for write-downs will be less.

So it's a positive contribution of around -- maybe you said then that's the SEK 100 million delta that we see from last year in a positive contribution. So Page 28 of the report, Note 4.

SEK 127 million less than last year. Thank you very much for your questions.

We wish you a fantastic day ahead. Thank you very much for coming.

Thank you. Thank you.