Q4 weaker than expected for H&M but new year starts more strongly

H&M Group revealed weaker than expected sales for Q4 (the period to the end of November) on Thursday, but sales improved in December and January with the new financial year off to a better start.

Its quarterly sales were SEK62.19 billion (€5.42bn/£4.54bn/$5.65bn), which was 3% higher in local currencies but was lower than analysts had predicted. Yet sales rose 4% in the next two months.

Gross profit for Q4 increased to SEK33.942 billion from SEK33.657 billion with the gross margin up to 54.6% from 53.7%.

Operating profit increased to SEK4.624 billion from SEK4.332 billion, for an operating margin of 7.4%, up from 6.9%. The operating profit figure was affected by wind-down costs of around SEK200 million relating to stores belonging to Monki and other one-offs.

But the profit figure after tax nearly doubled to SEK3.081 billion from SEK1.569 billion.

For the full year to the end of November, the company saw net sales falling to SEK234.478 billion from SEK 236.035 billion. In local currencies, net sales increased by 1%.

Gross profit increased by 4% to SEK125.299 billion for a gross margin of 53.4%, up from 51.2%, while operating profit increased to SEK17.306 billion, up 28% excluding the result from investments in associated companies and joint ventures. Net profit rose 33% to SEK11.584 billion.

CEO Daniel Ervér was upbeat about the results, saying that “after one year as CEO, I’m confident that we are on the right track. We have set a clear direction focusing fully on our core business: improving what makes the biggest difference for the customer and removing what doesn’t. While there is a lot left to do, we have a strong plan to drive the long-term growth we are aiming for.”

He said the Autumn collection — which launched with a series of events in fashion capitals such as Milan, London and New York, bringing music, culture and fashion together — “was very well received”. Gross margin and operating profit also grew, despite wind-down costs and increased investments in the customer offering, marketing and store optimisation. 

Strong online sales together with “improved product presentation and a more inspiring shopping experience, well received womenswear collections and effective cost control all contributed to a positive development in the quarter”.

He added that “during 2024, we made significant improvements. Our priority was the H&M product offering, with an initial focus on womenswear, where we increased our trend responsiveness and overall assortment relevance. In the fourth quarter, full-price selling of womenswear increased in all channels”.

The company also “accelerated the pace of improvements to our supply chain, increasing flexibility and product availability across channels. For example, we continue to deepen partnerships with our suppliers, shorten our product development process starting with womenswear, improve our demand forecasting, further develop our near-shoring capacity, and expand the use of RFID”.

During the year the group opened 88 new stores and continued to optimise its store portfolio. With more than 4,200 stores, “upgrading our store portfolio will remain a priority for us,” the CEO said.

And the company will open its first H&M store in Brazil, in São Paulo, towards the end of this year.