H&M's Q4 profit jumps higher than expected (updated)

H and M Hennes and Mauritz AB

29/01/2026 07:08

H&M struggling to improve sales amid pressure from Shein, Zara

Retailer bracing for continued weak consumer sentiment

Local-currency sales down 2% in December-January

Shares up in recent months as cost control boosts profit margins

Adds analyst comment in paragraph 6, CEO comments in paragraphs 7-9

By Greta Rosen Fondahn

STOCKHOLM, Jan 29 (Reuters) - H&M HMb.ST warned of a slowdown in recent winter sales on Thursday even as cost controls helped the fast-fashion retailer record better-than-expected results for the fourth quarter in what it called a "challenging environment".

H&M has struggled to accelerate sales as consumers rein in spending, with cut-price online retailers like Shein now competing for its price-sensitive customers and rival Inditex's ITX.MC Zara dominating the upmarket end of fast fashion.

The Swedish retailer's operating profit in the September-to-November quarter, which includes Black Friday, rose 38% from a year earlier to 6.36 billion crowns ($724 million), beating an LSEG analysts' poll forecast of 5.53 billion crowns, and its operating margin widened to 10.7% from 7.4%.

CEO NOT SATISFIED WITH SALES, BUT MOVING IN RIGHT DIRECTION

During his two years on the job, CEO Daniel Erver has sought to improve profitability, partnering with pop stars to make H&M trendier and tightening cost control.

H&M's stock has risen 31% over the past six months supported by a recovery in margins. But analysts say Erver must now show he can also reignite sales.

"It doesn't feel like they've really got their sales growth sorted out yet," said Inderes analyst Lucas Mattsson, while adding that rebounding margins were, nevertheless, a positive sign.

Erver told analysts and media on Thursday that H&M was not yet where he wanted it to be in terms of brand perception, but that it was moving in the right direction.

"I am not satisfied with the sales development, and I see potential for further sales growth going forward," he told Reuters, adding H&M still had measures it planned to get off the ground.

The company needed to gain a more precise understanding of what customers want and bring those products to market more quickly, he said.

WEAK CONSUMER CONFIDENCE LINGERING, TARIFF COSTS TO RISE

While local-currency sales grew 2% in the quarter, they dropped 2% in December and January, the company said, pointing to calendar effects.

Chief Financial Officer Adam Karlsson said lingering weak consumer confidence, particularly in some European markets, may increase the need to offer discounts this quarter.

H&M also said it expected trade tariff costs to rise.

Its shares were down 1.4% by 1320 GMT as disappointment over the company's outlook outweighed the upbeat quarterly results.

H&M proposed a dividend of 7.10 crowns per share, up from 6.80 crowns and above an expected 6.83 crowns.

($1 = 8.7903 Swedish crowns)

 (Reporting by Greta Rosén Fondahn and Anna Ringstrom; Editing by Joe Bavier)

 ((anna.ringstrom@thomsonreuters.com))