Companies

H&M improves profitability in the second quarter despite flat sales

Jun 29, 2026 Sweden

The Sweden-based fashion retailer reported that sales remained broadly unchanged in local currencies in the second quarter, while improved margins and lower costs helped to increase profitability

“Sales in the quarter were somewhat lower than planned, while profitability and the stock-in-trade situation developed well. The profitability improvement and increased inventory productivity are in line with our long-term work to lay the foundations for sustainable and profitable growth”, said Daniel Ervér, CEO of H&M.

Second-Quarter Results

In the second quarter of the 2026 financial year, which ended on the 31^stof May, the company’s net sales totalled 54.82 billion Swedish kronor (4.95 billion euros). On local currencies, sales remained consistent with those of the same period last year, despite a roughly 3% reduction in the number of stores. However, the stronger Swedish krona reduced reported net sales by almost 3 percentage points when foreign-currency revenues were converted into SEK.

In the second quarter of the year, H&M’s gross margin widened by 120 basis points compared with the same quarter of the previous year, rising from 55.4% to 56.6%. This improvement reflects enhanced sourcing efficiency and stronger supplier partnerships.

H&M reported that SG&A expenses declined by 1% year-on-year in the second quarter of the year, demonstrating continued cost discipline. Meanwhile, the company’s operating profit before restructuring costs increased by 11% to 6.59 billion Swedish kronor (595.5 million euros), and the operating margin improved by 160 basis points to 12.0%, up from 10.4% in second quarter of the 2025 financial year.

The fashion retailer reduced its inventory by 10% year-on-year to 34.94 billion Swedish kronor (3.2 billion euros) by the end of the quarter. This reflects a shift towards tighter inventory management and lower working capital requirements, all the while ensuring product availability is maintained.

First-Half Results

In the first half of the current fiscal year, H&M reported net sales of 104.44 billion Swedish kronor (9.44 billion euros). Sales in local currencies declined by 1% compared to the same period a year earlier.

Meanwhile, gross margin improved from 52.3% in the first half of 2025 to 53.8%, and operating profit before one-off costs increased by 14% year-on-year to 8.10 billion Swedish kronor (731.9 million euros).

Current Quarter

Looking ahead, H&M said that sales in June were expected to be broadly unchanged from a year earlier in local currencies, while third-quarter markdown costs were expected to remain stable. The company added that it is monitoring developments in the Middle East but emphasised that its flexible supply chain enables it to respond to changing conditions.

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