H&M posts higher 2025 earnings despite muted sales growth

Swedish fast fashion giant H&M reported Thursday higher full-year profits in 2025 despite muted sales growth, as tighter cost control, improved inventory management and a stronger product mix helped offset weak consumer confidence and currency headwinds.

For the 12 months to November 30, 2025, the retailer posted net sales of $26 billion (SEK228.3 billion), down from $26.7 billion (SEK234.5 billion) a year earlier, reflecting a 2% increase in local currencies that was offset by the stronger Swedish krona.

Operating profit rose to $2.1 billion (SEK18.4 billion) from $2 billion (SEK17.3 billion), lifting the operating margin to 8.1% from 7.4%. Net profit increased to $1.4 billion (SEK12.1 billion), or $0.86 (SEK7.58) per share.

Strong Q4 results

The fourth quarter delivered a sharper improvement in profitability. Operating profit for the September-to-November period jumped 38% year on year to $724 million (SEK6.36 billion), beating market expectations, while the operating margin widened to 10.7% from 7.4%. Quarterly net sales totalled $6.7 billion (SEK59.2 billion), with growth of 2% in local currencies despite H&M operating around 4% fewer stores than a year earlier.

Management said results were driven by a stronger customer offering, improved gross margins and disciplined cost control. Selling and administrative expenses fell 9% in Swedish kronor during the quarter, while inventory levels declined 12% year on year, improving stock efficiency and cash flow. Cash flow from operating activities for the full year reached $3.5 billion (SEK31.1 billion).

Chief executive Daniel Ervér said H&M was “moving in the right direction” on profitability but acknowledged sales growth remained below ambitions as consumers stayed cautious.

Outlook

The retailer flagged a 2% decline in local-currency sales for the December-January period, citing a post-Black Friday slowdown and calendar effects linked to the timing of the Chinese New Year.

Looking ahead, H&M plans capital expenditure of $1.0-1.1 billion (SEK9-10 billion) in 2026, focused on store upgrades and technology, including more data-driven decision-making and AI. The group is also expanding selectively in growth markets such as Brazil and Latin America while continuing to optimise its store footprint.

The board proposed an increased dividend of $0.81 (SEK7.10 per share), up from SEK6.80, and renewed authorisation to buy back shares. Shares in H&M have risen about 31% over the past six months, supported by the recovery in margins, though the company warned that weak consumer confidence and higher trade tariffs could pressure near-term sales.

(US$1 = SEK 8.8)

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Nathaniel Alexander Abaño

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