Companies

H&M improves third-quarter profitability despite modest sales growth

Sep 25, 2026 Sweden

The Sweden-based fashion group reported improved profitability in the third quarter of the 2026 financial year, even though sales increased by just 1% in local currencies

“Our work – especially within purchasing, cost control and more efficient operations – has contributed to a more profitable business. Although sales developed in a positive direction during the quarter, we see further potential to increase sales going forward”, commented Daniel Ervér, CEO of H&M.

Third-Quarter Results

In the third quarter of the 2026 financial year, which ended on the 31^stof August, H&M recorded net sales of 57.2 billion Swedish kronor (5.1 billion euros), compared to 57.0 billion (5.0 billion) in the same period last year. Despite operating around 2% fewer stores, sales increased by 1% year-on-year in local currencies.

The company’s gross profit totalled 30.9 billion Swedish kronor (2.73 billion euros) in the third quarter, up from 30.1 billion Swedish kronor (2.66 billion euros) in the same period a year ago, while the gross margin improved from 52.9% to 54.0%. This improvement was due to one-off effects of around 1.6 percentage points relating to tariffs and import costs, which had previously increased the cost of goods sold.

In the third quarter of the current financial year, selling and administrative expenses fell by 1% to 24.8 billion Swedish kronor (2.2 billion euros); a decline of 1% in local currencies too.

H&M’s third-quarter operating profit rose to 6.0 billion Swedish kronor (531.2 million euros), up from 4.9 billion (433.9 million) in the same quarter a year earlier. The operating margin also improved, rising from 8.6% to 10.6%, and including a positive one-off effect of around 1.6 percentage points relating to tariffs and goods imports.

The fashion group attributed the broader improvement in profitability to its efforts in the areas of purchasing, cost control, and more efficient operations.

Ultimately, profit after tax increased to 4.1 billion Swedish kronor (363.0 million euros), up from 2.6 billion (230.2 million) a year earlier. Operating cash flow improved by 19%, reaching 11.9 billion Swedish kronor.

Nine-Month Results

In the first nine months of the current financial year, H&M reported net sales of 161.6 billion Swedish kronor (14.3 billion euros), which is down from 169.1 billion Swedish kronor during the same period last year (15.0 billion euros). However, sales remained unchanged in local currencies.

Nevertheless, profitability improved. The nine-month gross margin increased year-on-year from 52.5% to 53.9%. Operating profit rose from 12.0 billion (1.1 billion) to 13.5 billion Swedish kronor (1.2 billion euros), and the operating margin improved from 7.1% to 8.3%.

The company’s profit after tax reached 8.8 billion Swedish kronor (778.2 million euros), up from 7.8 billion (690.7 million) in the same period last year.

1 SEK = 0,089 EUR

Image Credits: businessoffashion.com

Sweden Companies Fashion H&M Quarter Results Results