H&M revealed a 1% increase in local currency terms despite a slightly greater-than-expected decline in second-quarter sales, highlighting continued challenges from cost pressures and currency fluctuations.
The Swedish fashion giant’s March–May sales came in at US $ 5.27 billion, which was slightly below analysts’ predictions of US $ 5.30 billion and down from US $ 5.54 billion a year earlier.
During the same period last year, operating profit decreased from US $ 660 million to US $ 550 million, somewhat above market forecasts of US $ 547 million.
The drop was mostly caused by a reduced gross margin, which was impacted by the stronger Swedish krona, greater freight costs, and higher purchase prices associated with a stronger US dollar.
Additionally, H&M reported better inventory levels, with stock growth considerably slowing down from the prior quarter. The firm is still committed to improving its selection of products, the in-store and online shopping experiences, and entering emerging regions.
CEO Daniel Ervér acknowledged these challenges, saying that increased freight expenses and increased purchase prices due to a stronger US currency had a negative impact on the quarter’s performance. Profitable sales growth will result from the favourable developments in key areas including online, H&M womenswear, and H&M Move, as well as from the ongoing emphasis on effective cost control. At the conclusion of the second quarter, there were 4% fewer stores than at the same time last year, despite a 1% increase in local currency sales. Sales rose 3% when these closures were excluded.
With demand showing signs of increasing over the summer, H&M predicted that June sales would rise by 3% in local currencies.
With the goal of providing “fashion and quality at the best price in a sustainable way” to a market of over 200 million customers, the brand is also getting ready to open its first physical and online stores in Brazil in the second half of 2025.
