Hennes & Mauritz reports strong profit growth in first quarter despite sales decline

The Swedish apparel group Hennes & Mauritz AB (H&M) experienced a significant decline in sales in the first quarter of the 2025/26 financial year, largely due to negative currency effects. However, the parent company of brands such as H&M, Cos, Weekday, & Other Stories and Arket managed to significantly increase its profit. This was revealed in an interim report published on Thursday.

According to the report, group sales from December to February amounted to 49.6 billion Swedish kronor (5.30 billion dollars). This represented a 10 percent decrease compared to the same quarter last year. The development was significantly influenced by the appreciation of the Swedish krona. The company explained that in local currencies, revenue in the first quarter fell by only one percent.

In all market regions, the group suffered losses. Revenue fell by 3 percent in the Nordic countries; 8 percent in Western Europe; and 7 percent in both Eastern and Southern Europe. The decline was 15 percent in the Americas, while sales in the Asia, Oceania and Africa region dropped by 18 percent.

Cost-saving measures and lower discounts boost results

In terms of earnings, the group made progress. The gross margin increased from 49.1 to 50.7 percent compared to the same quarter last year, largely due to fewer markdowns. At the same time, the group was able to further reduce its selling and administrative expenses.

Operating profit rose by 26 percent to 1.5 billion Swedish kronor. Net profit attributable to shareholders reached 724 million Swedish kronor, exceeding the previous year's level by 23 percent.

Chief executive officer Daniel Ervér highlighted the positive aspects of the current results. He explained in a statement that demand had recovered after a weak December. The sales trend was positive towards the end of the quarter due to the positive response to the spring collections.

Ervér also pointed to the continued progress in earnings. “Thanks to continued good cost control, greater efficiency in product purchasing and external factors that had a positive impact on purchasing costs, we were able to increase both the gross margin and the operating margin compared to the same quarter last year,” he emphasised.

Management sees slight upward trend in sales

In the first weeks of the second quarter, the company observed a continuation of the slight upward trend. The group stated that, according to current information, sales in March are expected to have increased by one percent, adjusted for currency. It warned, however, that the impact of markdowns on earnings would be slightly higher in the current quarter than in the same period last year.

Management also expressed confidence in its ability to manage the impact of the crisis in the Middle East. “The company is closely monitoring developments in the Middle East and their impact on world trade,” a statement said. “Thanks to a high degree of flexibility in the supply chain and a low proportion of air freight, there are opportunities to adapt the flow of goods to the changing conditions. The Middle East markets account for only a small part of the company's total sales and are served by franchise partners.”

This article was translated to English using an AI tool.

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