H&M: stable revenue and rising profitability. But its share price slips on the stock market

On the cost front, selling and administrative expenses fell by 1 per cent to 24.83 billion kroner (2.20 billion euros), compared with 25.17 billion (2.23 billion euros) in the previous year. Cost containment contributed to the growth in operating profit, which reached 6.04 billion kroner (535.6 million euros), compared with 4.91 billion (435.9 million euros) in the third quarter of 2025. The operating margin thus rose to 10.6%, from 8.6% in the third quarter of 2025, also benefiting by approximately 1.6 percentage points from one-off effects related to tariffs and imports. “We are increasing speed and precision throughout the value chain, adopting an increasingly data-driven approach and expanding the use of artificial intelligence,” emphasised Daniel Ervér, CEO of H&M, during the call with analysts.

Net profit rose to 4.10 billion kronor (363.6 million euros), compared with 3.21 billion (285 million euros) in the same period of the previous financial year. Earnings per share rose from 2.01 to 2.58 kroner, equivalent to approximately 0.18 and 0.23 euros respectively. Cash flow performance was also positive: cash flow from operating activities increased by 19 per cent, reaching 11.91 billion kroner (1.06 billion euros), compared with 9.99 billion (885.8 million euros) a year earlier.

At the end of August, stock levels stood at 39.36 billion kroner (3.49 billion euros), up from 37.94 billion (3.37 billion euros) a year earlier. According to the group, the increase is mainly attributable to the higher value of goods in transit, due to disruptions in global supply chains, as well as the temporary effects of the consolidation of its European logistics network. H&M nevertheless considers the composition of its stock to be positive.

With regard to the geographical breakdown of revenue, the CFO clarified during the call: ‘Sales have grown in all regions, with the exception of Western Europe, where market conditions have been hampered by consumer caution and high levels of discounting, particularly in Germany and the UK’, whilst the CEO added: “In Germany, we are operating in a challenging environment, but we are gaining market share. We are, however, less satisfied with our performance in the UK.” He also noted: “The closure of the warehouse in Belgium also had an impact on third-quarter sales, but this effect should ease off during the remainder of the fourth quarter.” Turning to geopolitical tensions, Ervér observed: “The conflict in the Middle East has caused disruption to maritime and air transport, leading to delays in the delivery of certain goods during the third quarter.”

Looking at the first nine months of the financial year, the picture shows that sales growth remains weak, whilst profitability has improved. The group’s net sales amounted to 161.62 billion kronor (14.34 billion euros), compared with 169.06 billion (15.00 billion euros) in the same period of the previous financial year. In local currencies, however, turnover remained in line with that of the first nine months of the previous year.

Gross profit fell to 87.05 billion kroner (7.72 billion euros), from the previous figure of 88.74 billion (7.87 billion euros), but the gross margin improved from 52.5% to 53.9%. At the same time, selling and administrative expenses fell by 4 per cent to 73.59 billion kronor (6.53 billion euros), from 76.59 billion (6.80 billion euros) a year earlier. In local currency terms, costs remained broadly in line with the previous year’s levels.

The result was an increase in operating profit, which rose from 12.03 billion kroner (1.07 billion euros) to 13.46 billion (1.19 billion euros), with the operating margin rising from 7.1 per cent to 8.3 per cent. Net profit also rose, reaching 8.77 billion kroner (777.6 million euros), compared with 687.8 million euros in the first nine months of the previous financial year. Earnings per share rose from 4.86 to 5.53 kronor, equivalent to approximately 0.43 and 0.49 euros respectively.

Finally, cash flow from operating activities reached 26.52 billion kroner (2.35 billion euros), an increase of 17 per cent compared with the 22.71 billion (2.02 billion euros) recorded a year earlier.