Companies

H&M posts weaker-than-expected first quarter

Apr 3, 2025 Sweden

The Sweden-based fashion group has posted weaker-than-expected first quarter results, but remains optimistic about the future as it continues to focus on long-term profitable growth

“Although we have made important progress in our plan and have good cost control, our sales and earnings in the quarter were somewhat weaker than planned – but the first quarter is the smallest quarter of the year for us in terms of sales and margin, and we are confident going forward”, commented Daniel Ervér, CEO of H&M.

First Quarter Results

Between the 1^stof December and the 28^th of February, the group’s net sales increased by 3%, or 2% in local currencies, as compared to the same period last year, to 55.33 billion Swedish kronor (5.15 billion euros). H&M pointed out that it started the quarter with almost 120 fewer stores than at the same time last year, and that there were 40 net store closures during the period.

In the first quarter of the current financial year, the group’s gross profit decreased to 27.16 billion Swedish kronor (2.53 billion euros) from 27.65 billion Swedish kronor (2.57 billion euros) in the same period last year, while the gross margin fell to 49.1% from 51.5%.

“The gross margin for the quarter was affected by negative external factors, increased markdowns and investments in the customer offering”, as well as a stronger Swedish krona, which led to unfavourable currency remeasurement effects.

As a result, H&M’s operating profit in the first quarter fell to 1.20 billion Swedish kronor (111.7 million euros), as compared to 2.07 billion kronor (192.8 million euros) in the same period last year, corresponding to an operating margin of 2.2% as compared to 3.9%.

In addition, the result after tax amounted to 579 million Swedish kronor (53.9 million euros), as compared to 1.23 billion Swedish kronor (114.5 million euros) in the first quarter of the prior year.

March Outlook

In March, the fashion group expects sales to increase by 1% in local currencies on a comparable basis to the same month last year, with a slight increase in markdown costs as a percentage of sales.

“With macroeconomic and geopolitical uncertainty, it is important that we continue to focus fully on our plan and offer the best combination of fashion, quality, price and sustainability for everyone”, added Ervér. “

We are therefore further strengthening our customer offering through an upgraded product offering, 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 in focus”, he concluded.

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