H&M increased operating profit in the third quarter — Asharq Al-Awsat

Swedish clothing retailer H&M increased its operating profit in the third quarter of the financial year, covering June through August, to SEK 6.04 billion, or about $608.63 million. A year earlier, the figure stood at SEK 4.91 billion, while the average forecast of analysts surveyed by LSEG was SEK 5.14 billion, Asharq Al-Awsat reports.

Margin exceeded expectations

H&M’s gross margin rose to 54% in the quarter, compared with 52.9% a year earlier. Analysts had expected the figure to be 53.4%. The company noted that last year’s gross margin was positively affected by one-off effects related to tariffs.

H&M CEO Daniel Ervér attributed the improved profitability to improvements in purchasing, cost control and operational efficiency. According to him, sales developed positively during the quarter, but the company still sees opportunities for their further growth.

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Sales rose by 1%

H&M’s sales in June through August increased by 1% in local currencies. The company also expects sales to rise by 1% in local currencies in September.

Ervér said that H&M is increasing the share of clothing it procures directly during the season. This should help the retailer respond more quickly to fashion trends, customer preferences and increasingly unpredictable weather conditions.

Competition in the market

Daniel Ervér has been H&M’s CEO since January 2024. He was tasked with improving profitability and strengthening the company’s brand, which competes, among others, with Shein and Inditex, the owner of Zara.