H&M Beats Q3 Profit Forecasts but Warns of Tariff Impact
H&M (ST:HMb) reported stronger-than-expected third-quarter earnings on Thursday, but the Swedish retailer struck a cautious note on sales and margins for the months ahead.
The fashion group posted an operating profit of 4.91 billion crowns ($523 million) for the June–August period. That compares with 3.51 billion a year earlier and came in well above the 3.68 billion forecast in an LSEG analyst poll. The result corresponds to an operating margin of 8.6%.
This marks a recovery after profits fell in both the first and second quarters of the year.
Sales Mixed as Strong Krona Weighs
Sales in local currencies rose 2%. However, net sales in Swedish crowns fell to 57.02 billion from 59.01 billion a year earlier. The company said the stronger krona reduced sales by around five percentage points due to currency translation effects.
H&M noted that its autumn collections have been well received by customers, providing some support for overall sales.
Outlook Dampened by Tariffs and Flat September
The retailer warned that U.S. tariffs will have a bigger impact on gross margins in the fourth quarter, which runs until the end of November.
It added that September sales in local currencies were flat compared to last year, reflecting strong comparative figures in 2024.
Cash Flow Improves
Cash flow from operating activities improved to 9.98 billion crowns in the third quarter, showing stronger liquidity even as sales growth slowed.
