Fashion retailer H&M beat forecasts in its latest earnings report for Q4 profit, but warns of a drop in December-January local-currency sales.
Operating profit jumped 38% to 6.364 billion crowns (US$723.5 million), beating analyst expectations of 5.53 billion crowns on an organic sales increase of 2%.
Sales in local currencies between 1 September 2025 and 30 November 2025 rose by 2%, with net sales totalling 59.221 million crowns.
“Performance during the quarter was largely driven by a stronger customer offering, good cost control and improved inventory productivity, as well as external factors that positively affected purchasing costs,” H&M CEO Danoel Ervér said.
Evér also said the company’s work in 2025 has contributed to positive development towards its future targets.
“The gross margin for the full year was at the same level as in the previous year, and the operating margin increased to 8.1%, compared to 7.4% last year,” he said.
The company’s CEO said it will continue to strengthen its foundation for continued profitable and sustainable growth, despite a potential rocky start to the new year.
“The start of the new year has been marked by continued geopolitical and economic uncertainty, which underlines the importance of an efficient organisation with short decision paths that operates close to the customer and has a high degree of flexibility and continued good cost control,” Evér said.
H&M has struggled to keep up with online retailers like Shein and its biggest competitor, Zara, leading to a new strategy for the company to expand both its in-store and digital channels.
“For 2026 we estimate that the sales effect from the store optimisation will turn around to become slightly positive,” Ervér said.
“In addition to our investments in new markets, new stores and an upgraded customer experience in a large share of our existing stores, we are also investing in the tech infrastructure.
“More data-driven decision-making and increased use of AI are improving our accuracy and giving us more tools for expressing creativity, thereby further strengthening our customer offering.”
At the time of writing, H&M (STO: HM-B) stocks were down 0.73% to 175.90 crowns. Its market cap is 248.03 billion crowns.
