Companies

H&M’s operating performance improves in the first quarter

Apr 3, 2024 Sweden

Despite a slight decline in net sales, the Sweden-based fashion group surprised with a “substantial improvement” in operating profit and total profit in the first quarter of its fiscal year

“In the first quarter, we continued to take steps in the right direction, with a gross margin of 51.5 per cent, a substantial improvement in operating profit to SEK 2.1 billion, inventory down by 7 per cent and continued strong cash flow. Through continued cost control, better precision in our collections and close cooperation with our suppliers, we now stand better equipped. We are fully focused on driving profitable growth going forward”, commented Daniel Ervér, CEO of H&M.

First Quarter Results

In the three months to the 29^th of February, the group’s total net sales reached 53.67 billion Swedish króna (4.61 billion euros), decreasing by 2% in local currencies, on a comparable basis to the same period of the last fiscal year. Online sales accounted for 30% of this figure.

H&M reported a gross profit of 27.65 billion Swedish króna (2.40 billion euros) in the first quarter of fiscal 2024 and a gross margin of 51.5%, as compared to a gross profit of 25.87 billion Swedish króna (2.24 billion euros) and a gross margin of 47.2% in the same quarter of fiscal 2023.

“The improvement work in the supply chain, the cost and efficiency programme and the continued normalisation of the external factors that influence purchasing costs resulted in a stronger gross margin in the first quarter of 2024”, concluded the group.

In the first quarter of the current financial year, the company’s operating profit increased by a significant 186% year-over-year to 2.08 billion Swedish króna (180.3 million euros), resulting in an operating profit margin of 3.9%. “The strong gross margin, the cost and efficiency programme, and good operational cost control all had a positive impact on operating profit”.

H&M posted a profit of 1.20 billion Swedish króna (104.0 million euros) in the first quarter of its current fiscal year, on a comparable basis to a profit of 540 million Swedish króna (46.80 million euros) in a similar period of fiscal 2023.