Companies

H&M fourth quarter operating income rises as sales outlook softens

Feb 3, 2026 Sweden

The Sweden-based fashion group reported an improvement in profitability in the fourth quarter. However, it warned of weaker sales at the start of the new year due to calendar effects and lower post-holiday demand

In the fourth quarter of the 2025 financial year, which ended on the 30^th of November, the company’s sales grew by 2% in local currencies, despite having fewer stores than a year ago. However, reported net sales of 59.2 billion Swedish kronor (5.6 billion euros) were held back by a negative currency impact of 7 percentage points from the stronger Swedish kronor.

H&M reported a gross profit of 33.1 billion Swedish kronor (3.1 billion euros) in the fourth quarter, as compared to 33.94 billion kronor (3.2 billion euros) in the same period the previous year. Meanwhile, the gross margin increased from 54.6% to 55.9%, reflecting supply chain improvements and favourable purchasing costs. This was partly offset by slightly higher markdowns.

The fashion retailer added that effective cost control helped to counter ongoing inflationary pressures, with selling and administrative expenses declining by 9% to 26.7 billion Swedish kronor (a 3% decline in local currencies; 2.5 billion euros).

H&M’s operating income increased sharply by 38% in the fourth quarter, reaching 6.36 billion Swedish kronor (601.5 million euros) compared to the same period in 2024. This corresponds to an operating margin of 10.7%, up from 7.4%.

“Performance during the quarter was largely driven by a stronger customer offering, good cost control and improved inventory productivity, as well as external factors that positively affected purchasing costs”, said Daniel Ervér, CEO of H&M.

However, the fashion retailer warned that it expects its sales to decrease by 2% year-on-year in local currencies between the 1^stof December 2025 and the 31^st of January 2026.

“Sales development should be seen in the light of strong sales during the Black Friday week at the end of November, which led to subdued demand in a number of markets in December. In addition, there is a negative calendar effect associated with the Chinese New Year, which this year falls in February”, reads the statement.

Full Year Results

In the 2025 financial year, the group’s net sales increased by 2% in local currencies, which resulted in reported sales of 228.3 billion Swedish kronor (21.6 billion euros), as compared with 234.5 billion a year earlier (22.1 billion euros).

Full-year operating profit rose from 17.31 billion to 18.39 billion Swedish kronor (1.6 billion to 1.73 billion euros), raising the operating margin from 7.4% to 8.1%. Meanwhile, profit after tax increased to 12.09 billion Swedish kronor (1.14 billion euros), up from 11.58 billion in the previous year (1.09 billion euros).

1 SEK = 0,095 EUR

Image Credits: fashiongonerogue.com

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