H&M’s latest quarterly report reveals a substantial surge in operating profit for the June-August period, reaching SEK 4.74 billion (€406 million/£353 million/$430.7 million). This notable improvement compared to the same period last year was driven by effective cost management and strong performance in key markets. It’s worth noting that the previous year’s figure included one-off costs of SEK 2.1 billion related to the company’s exit from the Russian market. Adjusted for these exceptional costs, the increase in operating profit was an impressive 58%.
Quarterly net sales increased by 6% to SEK 60.9 billion, although they remained relatively stable in local currencies compared to the previous year. Sales for H&M’s Portfolio Brands showed robust growth, rising by 16% in SEK and 10% in local currencies.
Gross profit increased by 10% to SEK 31 billion, resulting in a gross margin of 50.9%, up from 49%. Net profit for the quarter rose to SEK 3.3 billion from SEK 2 billion.
However, the report also highlighted a challenging September for H&M, with sales expected to decline by 10% in local currencies compared to September 2022. The discontinued operations in Russia account for 4 percentage points of this drop.
For the first nine months of the year, H&M reported an 8% increase in net sales to SEK 173.38 billion, although sales in local currencies remained flat. Gross profit reached SEK 87.2 billion, but the gross margin decreased to 50.3% from 51.1%. Operating profit rose to SEK 10.2 billion from SEK 6.3 billion when adjusted for one-off Russia-related costs of SEK 1.75 billion, marking a 26% increase over the previous year.
Net profit increased significantly by 61% to SEK 7.147 billion for the nine-month period.
CEO Helena Helmersson emphasized the company’s focus on profitability and inventory efficiency during the third quarter, which contributed to strong cash flow and profit development. She highlighted ongoing investments in technology to improve flexibility and response times in buying. H&M is also nearing the conclusion of its store portfolio rationalization process, with fewer closures planned going forward.
Helmersson noted that the company’s expansion into Latin America is progressing well, with plans to open its first store, both physical and online, in Brazil in 2025. Additionally, most of H&M’s stores in Ukraine are set to gradually reopen from November onwards.
She concluded by underlining the importance of stores in building the brand and the company’s commitment to enhancing the customer experience through increased store investments. In September, H&M successfully launched on JD.com, one of China’s major e-commerce marketplaces.
