H&M targets emerging markets as US and European demand softens

Fashion retailer H&M is actively seeking to expand into emerging markets such as Brazil and India, according to CEO Daniel Erver, as consumer spending weakens in its core European region and U.S. tariffs impact demand in its second-largest market. “In some of these markets that we haven’t really penetrated… we see a bigger opportunity for growth, Brazil being one, Latin America in general being one, and India being another,” Erver told Reuters.

H&M recently reported a significant jump in financial performance for the third quarter of 2025, with operating profit climbing to 4.9 billion Swedish krona, up from 3 billion Swedish krona year-over-year, and the operating margin improving to 8.6 percent from 5.9 percent. Sales grew 2 percent in local currencies despite the company operating 4 percent fewer stores. During the company's investor call following the release of its third-quarter results, Erver acknowledged that H&M is working hard to remain a growth company and is excited about the opportunity in Brazil, based on how well the company has been received by customers there.

The company is continuing its store portfolio optimisation work, which is expected to have a slightly negative impact on sales in the fourth quarter. Head of investor relations Joseph Ahlberg confirmed that the optimisation will focus on Brazil as a key part of the strategy, but also includes opportunities in other parts of the world, as well as a continued need to consolidate parts of the portfolio where customer demand is lacking. Management maintained cautious optimism amid macro uncertainty, citing strong supply chain gains and selective pricing actions ahead of anticipated fourth-quarter tariff headwinds.

H&M recently launched its premium brand, Cos, in India with a store opening in Delhi during the fourth quarter, following a strategy to capitalise on the "great opportunities for affordable luxury positioning" in the market. The retailer opened its first store in Brazil in August, with two more planned by the end of November and an additional four for 2026, including a location in Rio de Janeiro. H&M also plans a broader expansion across Latin America, with launches scheduled for Venezuela in the fourth quarter and Paraguay next year, having recently opened in El Salvador.