H&M announced on Thursday that its net sales fell in the third quarter due to unusually cold weather in June. The fashion retailer also revealed that it will not meet its earnings margin goal for the year, as its performance lagged behind that of competitor Inditex. However, September sales are showing signs of improvement.
From June to August, H&M’s net sales decreased to SEK 59.011 billion (€5.2 billion) from SEK 60.897 billion. Sales in local currencies remained flat during this period. The company’s gross profit also declined, dropping to SEK 30.133 billion from SEK 31.015 billion, although the gross margin improved slightly to 51.1%.
Selling and administrative expenses rose by 1% to SEK 26.602 billion. Operating profit fell to SEK 3.507 billion, below analysts’ expectations, compared to SEK 4.739 billion the previous year. The operating margin narrowed to 5.9%, though when excluding currency effects, it was similar to last year. Profit after tax dropped to SEK 2.307 billion from SEK 3.319 billion.
Despite these disappointing results, H&M expressed optimism about September. The company stated that its autumn collection has been well-received, with expected sales growth of 11% in local currencies compared to last year. New initiatives, including store upgrades and a revamped digital experience, are also underway.
In the nine-month period, net sales fell to SEK 172.285 billion from SEK 173.385 billion, with local currencies again flat. However, gross profit increased to SEK 91.357 billion, leading to a gross margin rise to 53%. Operating profit grew to SEK 12.682 billion, and post-tax profit jumped by 19% to SEK 8.503 billion.
CEO Daniel Ervér noted the challenges faced but remained optimistic, emphasizing the company’s focus on creating value for customers. He attributed slow sales in June to cold weather in key European markets, but noted an uptick in sales in July and August, with stronger performance in September.
Ervér highlighted that despite setbacks, marketing investments aim to enhance the H&M brand long-term, especially with the launch of the autumn collection. He stated, “The autumn collection represents the best of H&M: fantastic fashion and good quality at the best price.”
Looking ahead, H&M plans to open its first flagship store for H&M Beauty in Sweden and is set to launch digital stores on major Chinese e-commerce platforms. Additionally, a new H&M store will open in São Paulo, Brazil, at the end of 2025.
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