The Swedish clothing group Hennes & Mauritz AB suffered a significant decline in sales in the first quarter of the 2025/26 financial year, not least due to negative currency effects. However, the parent company of brands such as H&M, Cos, Weekday, & Other Stories and Arket was able to significantly increase its profits. This emerges from an interim report published on Thursday.
Accordingly, group sales in the months December to February amounted to 49.6 billion Swedish crowns (4.6 billion euros). This corresponded to a decrease of ten percent compared to the same quarter of the previous year. However, the development was influenced by the effects of the appreciation of the Swedish krona. In the respective local currencies, revenue in the first quarter only fell by one percent, the company explained.
The group suffered losses in all market regions. Revenues fell by three percent in the Nordic countries, by eight percent in Western Europe and by seven percent each in Eastern and Southern Europe. In America the decline was 15 percent, in the Asia, Oceania and Africa region sales fell by 18 percent.
Savings measures and lower discounts are boosting the result
However, the group was able to make progress in terms of results. The gross margin increased from 49.1 to 50.7 percent compared to the same quarter of the previous year, not least due to lower discounts. At the same time, the group was able to further reduce its sales overhead costs.
Operating profit rose by 26 percent to 1.5 billion Swedish crowns. The net result attributable to shareholders reached 724 million Swedish crowns (67 million euros), exceeding the corresponding previous year’s level by 23 percent.
CEO Daniel Ervér highlighted the positive aspects of the current results. After a weak December, demand has recovered, he said in a statement. Due to the positive response to the spring collections, the sales trend was positive at the end of the quarter.
At the same time, Ervér referred to the continued progress in earnings. “Thanks to continued good cost control, greater efficiency in product purchasing and external factors that had a positive impact on purchasing costs, we were able to increase both the gross margin and the operating margin compared to the same quarter last year,” he emphasized.
Management sees a slight upward trend in sales
In the first weeks of the second quarter, the company observed a continuation of the slight upward trend. According to current information, revenues in March are expected to have increased by one percent after adjusting for currency effects, the company said. However, he warned that the impact on earnings due to discounts in the current quarter would be slightly higher than in the same period last year.
Management was also confident that it would be able to overcome the effects of the crisis in the Middle East. “The company is closely monitoring developments in the Middle East and their impact on global trade,” it said in a statement. “Thanks to a high level of flexibility in the supply chain and a low proportion of air freight, there are opportunities to adapt the flow of goods to the changing conditions. The markets in the Middle East only make up a small part of the company’s total sales and are served via franchise partners.”
