Hennes & Mauritz

Sure. H&M uses this to refer to a wide range of factors that impact the gross margin (or cost of goods sold), which include eg. logistics costs, the cost of the actual product for H&M (which are outsourced) and impact of currencies to profitability (mostly USD as goods are purchased in USD). The product cost in turn is impacted by eg. labour cost, price of cotton (and other raw materials to a smaller extent). Recently these costs have been going down and hence the “external factors” are positive compared to last year as H&M is commenting.

Then there’s also “internal factors” (although H&M doesn use this term), which mostly means pricing. Here H&M typically gives comments regarding the impact of markdowns to the gross margin, but obviously also the list prices evolve continuously, typically following the development of “external factors” as H&M wants to keep prices competitive.

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