H&M’s net sales and gross profit slumped last quarter as retail locations closed, though shares rose as June sales showed signs of recovery.
Net sales were SE56.71 billion kr (US$5.96 billion), below estimates of 56.96 billion kr, with a 1% net sales increase in local currencies. Gross profit dropped to SE31.43 billion kr, down from 33.57 billion kr one year ago.
“The quarter’s result was negatively affected by higher purchasing prices as a result of a more expensive U.S. dollar and higher freight costs, but also by the fact that we have continued to invest in the customer offering,” said H&M CEO Daniel Ervér.
“The negative external factors that increased the costs of purchasing for the first half of the year are turning positive for the second half of the year.”
The company said it had 4% fewer stores at the end of the last quarter than one year ago, with 47 net closures during the quarter. Closures impacted all regions, with Asia, Oceania, and Africa seeing the most at 47.
Western Europe led sales last quarter at SE19.94 billion kr, an increase of 1% in local currencies. While all regions saw sales declines in Swedish krona, every region except the Nordic countries and Eastern Europe posted an increase in local currencies.
Net profit last quarter was SE3.96 billion kr, falling from 5.06 billion kr year-over-year but above FactSet estimates of 3.83 billion kr.
H&M projected its June sales would increase by 3% in local currencies year-over-year. It expects to close just over 200 stores across 2025, many of which will be under its Monki brand. Meanwhile, 80 stores are set to open this year, including its first in Brazil.
H&M’s (STO: HM) share price closed at SE134.60 kr, up from its previous close of 129.75 kr. Its market capitalisation is 189.8 billion kr.
