Following today’s release of H&M’s figures for the three months ending 31 August 2025; Chloe Tedford-Jones, apparel analyst at GlobalData, a leading data and analytics company, offers her view: “Continuing its trend from the previous quarter, H&M’s group sales fell 3.4% to SEK59.0bn in Q3 FY2024/25, however, this was partially hindered by the strength of the Swedish Krona, as sales in constant currency grew 2%. This led sales for the first nine months of its financial year to be down 1.9%, and remain flat in constant currency. H&M attributes its Q3 decline to the continued optimisation of its store network, evidenced by the closure of 135 underperforming locations, while it is also impacted by its ranges remaining less enticing than competitors with better fashion credentials such as Inditex. While the short-term impact of store closures has led the brand to expect sales in local currencies to remain flat in September, cost saving measures have already led to some improvement in operating profit, which rose 40.1% to SEK4.9bn in Q3. This corresponded to an operating margin of 8.6%, an improvement of 2.7ppts on the same period last year, driving a c9% increase in its share price in early morning trading.
“Western, Eastern, and Southern Europe were the group’s best performing regions in Q3, with sales rising 3% in local currencies, likely helped by improving consumer confidence as economic headwinds subside, as well as strong brand visibility. Asia, Oceania and Africa was the group’s worst performing region, where sales fell 2%, carrying out the most store closures in this market as the group continues to crack down on low profitability stores. The combination of cautious consumer spending and the negative impact of ongoing store optimisation limited the group’s performance in its home region of the Nordics, with sales remaining flat. North and South America rose 1%, aided by store openings in new locations, especially in Latin America, with the opening of H&M in Brazil in August of 2025 being well received, and the group planning further expansion in the region.
“Net sales for its Portfolio brands increased by 1% in local currencies in Q3, as stronger fashion credentials at fascias like ARKET and COS boosted sales amid low consumer confidence. The group continues to optimise its store footprint, with over 200 store closures planned for 2025. A large proportion of these closures are for Monki, however, the group plans to refurbish many of these into Weekday stores, a brand with better perceived fashion credentials, particularly among Gen Zs. This is likely to have a negative impact on sales in the short term, however early signs of improvement in local currencies point to a successful transition to growth in the future. The group is also investing in flagship store improvements through curated offerings and technological integration, while also improving its omnichannel offering by upgrading its online channel, allowing online sales to reach over 30% of the group’s revenue in the quarter.
“At the heart of the group’s turnaround is a renewed focus on marketing, with the eponymous H&M brand generating buzz by holding its first fashion show in seven years at London Fashion Week this month, using talent such as Romeo Beckham, Lila Moss and Lola Young to ensure maximum reach among the brand’s core audiences. As H&M continues to redefine itself against ultra-fast fashion and premium competitors, the brand must continue to improve its fashion credentials through marketing and celebrity endorsement..”
