H&M, falling quarterly revenues and disappointing estimates penalise the share price

Sweden's H&M group ended the first quarter of the 2025-2026 financial year with mixed results that did not convince investors. The stock on the Stockholm Stock Exchange dropped 8.54% in mid-session, despite an operating profit that rose 26% to SEK 1,512 million (around EUR 140 million) in the first three months of the financial year. The shares were particularly weighed down by a drop in net sales, which fell to SEK 49,607 million (around EUR4.60 billion) from SEK 55,333 million in the same period a year earlier, penalised by a negative exchange rate effect of more than 9 percentage points, linked to the appreciation of the Swedish krona, and a distribution network that was about 4% smaller than twelve months ago.

Disappointing analysts' expectations was above all the sales guidance for March 2026, which was expected to grow by just 1% in local currency. On the other hand, positive signs came from operations: gross margin reached 50.7%, an improvement from 49.1% a year earlier, while inventories were reduced by 16%, reflecting more efficient inventory management. The group has a solid liquidity position and will present its results for the first quarter of 2026 on 25 May.

The Swedish fashion group's net sales stood at SEK 49,607m (about EUR 4.60bn), compared to SEK 55,333m (about EUR 5.13bn) in the same period last year. In local currency terms, sales recorded a decrease of 1%, also reflecting a reduction in shop stock of around 4% compared to the same period last year. Expressed in Swedish kronor, the figure was penalised by a negative exchange rate effect of more than 9 percentage points, attributable to the appreciation of the Swedish krona.

Gross margin increased to SEK 25,138 million (approximately EUR 2.33 billion), compared to SEK 27,169 million (approximately EUR 2.52 billion) in the previous year, corresponding toa gross margin of 50.7% compared to 49.1% in the previous year. Costs related to inventory write-downs were slightly lower than in the previous year.

Selling and administrative expenses, reads the group's note, decreased by 1 per cent in local currency and 9 per cent in SEK, down to SEK 23,625 million (about EUR 2.19 billion) from SEK 25,938 million (about EUR 2.41 billion) in the comparison period.