Sweden's H&M reports $12.33 bn in H1 sales amid margin pressure

The selling and administrative (S&A) expenses stood at SEK 51,427 million, reflecting a 1 per cent increase in local currencies. The operating profit dropped to SEK 7,117 million, with the operating margin at 6.4 per cent (8.1), primarily due to a lower gross margin impacted by a stronger US dollar, higher freight costs, markdowns, and customer offering investments.

The profit after tax (PAT) was SEK 4,541 million, or SEK 2.85 per share, while cash flow from operating profit was SEK 12,729 million.

H&M was ranked highest in climate efforts by Stand.earth for phasing out fossil fuels. The board has authorised the buyback of up to 1.1 million class B shares worth a maximum SEK 175 million to support its LTIP. Additionally, the company will launch its first stores and online presence in Brazil in the second half (H2) of 2025, it said in a press release.

The company’s June 2025 sales are projected to rise by 3 per cent in local currencies, affected by a one percentage point (pp) negative calendar impact.

“Our plan, with its focus on the product offering, the shopping experience and brand, is again confirmed by the progress we see. The positive development in important areas such as online, H&M womenswear and H&M Move, as well as continued focus on good cost control, will contribute to a profitable sales development,” said Daniel Erver, chief executive officer (CEO) at H&M. “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,” added Erver.

Meanwhile, in the second quarter (Q2) of 2025, H&M Group’s sales in local currencies rose by 1 per cent despite operating 4 per cent fewer stores than the previous year. Adjusted for store closures, sales grew by 3 per cent YoY.

The net sales amounted to SEK 56,714 million (~$6.24 billion), with currency translation effects from a stronger Swedish krona reducing sales by around 6 pp.

The gross profit stood at SEK 31,425 million, corresponding to a gross margin of 55.4 per cent. However, these cost pressures are expected to ease in the second half of the year.

Selling and administrative (S&A) expenses totalled SEK 25,489 million, reflecting a 2 per cent increase in local currencies.

The operating profit fell to SEK 5,914 million, with an operating margin of 10.4 per cent, largely due to the reduced gross margin and currency impacts. PAT was SEK 3,962 million, or SEK 2.48 per share.

Cash flow from operating activities in Q2 was SEK 8,528 million, while cash and cash equivalents including undrawn credit facilities amounted to SEK 35,828 million.

“The quarter’s result was negatively affected by higher purchasing prices as a result of a more expensive US dollar and higher freight costs, but also by the fact that we have continued to invest in the customer offering. Investments made to strengthen our customer offering and give customers even more value for money,” added Erver.

ALCHEMPro News Desk (SG)