H&M Q1 profits drop amid ‘external market pressures’

H&M has seen its operating profit drop 42% to SEK 1.2bn (£95m) for the three months ended 28 February 2025, down from SEK 2.1bn (£160m) in the same period last year.

The Swedish retailer stated that this drop was due to external pressures, including challenging macroeconomic conditions, which were compounded by increased markdowns during the quarter.

H&M also noted that it continued to invest heavily in “enhancing its customer offering”, which it claims impacted its gross margins.

Alongside this, the company’s sales increased by 2% in local currencies to SEK 55.3bn (£4.3bn), however this fell just short of analyst expectations.

Looking ahead, the company expects its March sales to increase by 1% in local currencies compared with the same month the previous year.

The retailer stated that it plans to open around 80 new stores in 2025, while closing 190 stores, mainly in established markets.

CEO Daniel Ervér said: “Our operating profit was affected by the temporary challenges related to gross margin development, as well as the ongoing investments in our customer proposition. Despite these hurdles, we remain focused on strengthening our product offering and improving our in-store and online shopping experience.

“We continue to invest in our core business, focusing on driving growth through a more integrated and efficient customer experience across both physical and digital channels. We’re confident that the measures we’re taking will support sustainable and profitable growth in the coming months.”

He added: “While we face challenges in the short term, we are laying the foundation for long-term growth. We will continue to invest in both physical and digital spaces to ensure we are meeting customer expectations and positioning H&M for continued success in the future.”