H&M Q2 sales dip more than expected but sees signs of summer recovery
H&M posted a 1% increase in sales in local currencies for the second quarter, despite having 4% fewer stores compared with the same period last year.
H&M reported a slightly larger-than-expected fall in second-quarter sales but saw a 1% increase in local currency terms, underlining ongoing headwinds from currency fluctuations and cost pressures.
Sales for the March to May period at the Swedish fashion giant reached SEK 56.7bn (£4.5bn), down from SEK 59.6bn a year earlier and just below analysts’ forecasts of SEK 57.0bn. However, when adjusted for currency effects, sales actually grew by 1%.
Operating profit fell to SEK 5.91bn (£465m) from SEK 7.10bn (£560m) during the same period last year, slightly beating market expectations of SEK 5.88bn.
The decline was largely driven by a lower gross margin, affected by a stronger Swedish krona, increased purchasing costs linked to a higher US dollar, and rising freight expenses.
CEO Daniel Ervér acknowledged these headwinds: “The quarter’s result was negatively affected by higher purchasing prices as a result of a more expensive US dollar and higher freight costs, but also by the fact that we have continued to invest in the customer offering.
“The negative external factors that increased the costs of purchasing for the first half of the year are turning positive for the second half of the year.”
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H&M also reported improved inventory levels, with stock growth slowing significantly compared to the previous quarter.
The retailer continues to focus on enhancing its product offering, online and physical shopping experiences, and expanding into growth markets.
Ervér continued: “Our plan, with its focus on the product offering, the shopping experience and brand, is again confirmed by the progress we see. The positive development in important areas such as online, H&M womenswear and H&M Move, as well as continued focus on good cost control, will contribute to a profitable sales development.”
“Sales in local currencies increased by 1% in the second quarter, with 4 percent fewer stores at the end of the quarter compared with the same point in time the previous year. Excluding these closures, sales increased by 3 percent.”
Looking ahead, H&M said that sales in June were expected to increase 3% in local currencies as demand shows signs of picking up over the summer months.
The brand is also preparing to launch its first physical and online stores in Brazil in the latter half of 2025, aiming to bring “fashion and quality at the best price in a sustainable way” to a market of more than 200 million consumers.
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