Financial Performance

H&M reported second‑quarter operating profit of SEK 5.91 billion, falling short of the consensus forecast of SEK 6.38 billion. Net sales amounted to SEK 54.83 billion, also missing the SEK 55.25 billion estimate. Gross margin improved to 56.6% from 55.4% year‑earlier, generating gross profit of SEK 31.05 billion versus SEK 31.43 billion a year ago. Selling and administrative expenses declined 1% to SEK 25.13 billion, inclusive of SEK 679 million of one‑off restructuring costs tied to changes in sales markets and the central sales organisation. After stripping out the restructuring charge, adjusted operating profit rose 11% to SEK 6.59 billion, delivering a 12% margin, up from 10.4% in the prior period and standing about 3‑4% above consensus. Reported operating profit margin was 10.8%, level with the previous year. Net income was SEK 3.96 billion, unchanged year‑on‑year, while earnings per share increased marginally to SEK 2.49 from SEK 2.48. Cash flow from operating activities surged 24% to SEK 10.59 billion.

Inventory Management and Guidance

Chief Executive Daniel Ervér said tighter inventory management had, in some cases, limited the company’s ability to fully meet demand, but indicated potential to improve precision to better balance availability and demand. The retailer expects sales in local currencies for June 2026 to be on par with the same month last year.

Store Expansion

During the quarter H&M opened its first store in Rio de Janeiro and reopened its flagship store on Hamngatan in Stockholm. The company announced plans to open its first store in Paraguay in the second half of 2026 and its first store in Argentina in 2027.

Stock‑in‑Trade and Sales Trends

Stock‑in‑trade declined 10% to SEK 34.94 billion from SEK 38.82 billion a year earlier; on a currency‑adjusted basis the decline was 2%. Stock‑in‑trade represented 15.8% of rolling 12‑month sales, down from 16.6% previously. Net sales were down from SEK 56.71 billion a year earlier, with local‑currency sales described as “fairly in line” with the prior year despite a roughly 3% reduction in store count at quarter‑end.

Analyst Commentary

Morgan Stanley, which rates H&M “underweight” with a price target of 120 crowns, attributed the headline profit miss primarily to the one‑off restructuring charge rather than weaker underlying trading. The broker noted that, after adjusting for the SEK 679 million restructuring expense, operating profit was 3‑4% above consensus and considered the results broadly in line with investor expectations. However, Morgan Stanley warned of downside risk to second‑half consensus, citing slowing constant‑currency revenue growth and diminishing cost‑cutting tailwinds as gross‑margin and overhead savings taper. The firm also flagged that technology investments are set to increase from the second half onward, while raw‑material and freight costs remain a headwind.

Half‑Year Summary

For the first half of the year, net sales totaled SEK 104.44 billion, down from SEK 112.05 billion a year earlier. Operating profit excluding one‑time costs rose 14% to SEK 8.10 billion. Net income for the half increased to SEK 4.67 billion, or SEK 2.95 per share, compared with SEK 4.54 billion, or SEK 2.85 per share, in the prior period.