H&M closes quarter with 3 percent sales increase, profits halved

Business

In March, the Swedish group's sales are expected to increase by 1% in local currency Credits: H&M

H&M reported increased turnover (though weaker than analysts' forecasts) for the quarter spanning December 1 to February 28. Furthermore, the Swedish group's sales are projected to increase by 1 percent in local currency in March compared to the same month last year.

In a statement released today, March 27, the company estimates that the overall negative impact from external factors will be significantly lower in the second quarter compared to the first, while strengthened collaboration with suppliers is yielding further positive effects. "Currently, the conditions are in place for an overall positive effect in the second half of the year compared to the previous year, with a simultaneous strengthening of the offering to customers," explains management.

In terms of figures, net sales for the H&M Group, which was included in the Carbon Disclosure Project's A List for its leadership in climate transparency and impact, increased by 3 percent in the first quarter, reaching 55,333 million Swedish kronor, equivalent to approximately 5.52 billion dollars.

In local currency, net sales increased by 2 percent with approximately 3 percent fewer stores compared to the previous year. Sales performance was strong in Western, Southern, and Eastern Europe, with positive developments in Germany and Poland during the quarter.

“Sales increased by 3 percent in Swedish kronor in the first quarter, with womenswear collections being well-received. Operating profit and profitability were impacted by a temporarily challenging gross margin trend. Our main priorities are strengthening the product offering, a more inspiring shopping experience, and a stronger brand. In this way, we are creating the conditions for long-term, profitable, and sustainable growth,” states CEO Daniel Ervér.

Gross profit was 27,169 million Swedish kronor. This corresponds to a gross margin of 49.1 percent. "The quarter's gross margin was affected by negative external factors, increased markdowns, and investments in the customer offering," explains management in the statement.

Operating profit was 1,203 million Swedish kronor, corresponding to an operating margin of 2.2 percent (3.9 percent). The decline in operating profit is attributable to the reduced gross margin, the statement explains.

Proposed dividend of SEK 6.80 per share

Profit after tax was 579 million Swedish kronor.

The Annual General Meeting will be held on May 7, 2025, to decide, among other things, on the proposed dividend by the Board of Directors of SEK 6.80 per share, to be paid in two installments.

Outlook for the coming months

"We can see that the improvements made, especially in the women's assortment, are starting to have a positive effect. Here we have simplified the organization and become faster at adapting to new trends and creating a more relevant assortment. Throughout the year, we are implementing similar improvements for all our customer groups," says CEO Daniel Ervér.

The company is also focusing on the renovation of physical stores, which continues to be a top priority. "In addition to the refurbishment of key stores in some major cities, we are extending customer experience improvements to other stores in other markets throughout the year," the statement reads.

The chain is therefore strengthening its customer offering with revamped products and through a more inspiring shopping experience and a stronger brand. "This creates the conditions for long-term profitable and sustainable growth, with the H&M brand and organic growth at the forefront," concludes the CEO.

This article was translated to English using an AI tool.

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