H&M reports weaker-than-expected sales

Swedish fast-fashion retailer H&M reported weaker-than-expected first-quarter sales, indicating a sluggish start to its spring and summer season. For the period from December 1, 2024, to February 28, 2025, net sales increased by 3% to SEK 55.3 billion (approximately $5.52 billion). In local currencies, sales rose by 2%, with about 3% fewer stores compared to the previous year.

However, the company's profitability declined during the quarter. Operating profit fell by 42% to SEK 1.2 billion, resulting in an operating margin of 2.2%, down from 3.9% in the same period the previous year. This decrease was primarily due to increased discounting, higher marketing investments, and external factors affecting the gross margin.

In March, sales growth was even weaker, with just a 1% increase in local currencies, suggesting continued challenges as the company enters its spring and summer season.

Despite the current challenges, H&M's CEO, Daniel Erver, expressed confidence, stating that the negative impacts on profitability from brand investments are expected to lessen in the second quarter. The company also anticipates positive effects from improved women's wear assortments in the upcoming quarters.

The retailer, which also owns brands including Arket, Cos, & Other Stories, and Weekday, has been upgrading stores and sharply reducing its overall store numbers. H&M currently has 4,213 stores globally, its lowest number since 2016.

The weaker-than-expected first-quarter performance and the sluggish start to the spring and summer season have raised concerns about H&M's ability to maintain its competitive edge in the fast-fashion market.