For the third quarter (Q3) ended August 31, 2026, net sales increased 1 per cent in local currencies despite the store portfolio being around 2 per cent smaller year on year (YoY). The gross profit increased 2 per cent and gross margin improved to 54.0 per cent from 52.9 per cent. Selling and administrative expenses declined 1 per cent, while operating profit rose 23 per cent and operating margin expanded to 10.6 per cent from 8.6 per cent. Profit after tax increased 28 per cent, earnings per share (EPS) rose to 2.58 from 2.01, and cash flow from operating activities grew 19 per cent.
Sweden’s H&M reported a 23 per cent rise in Q3 operating profit and 28 per cent growth in profit after tax.
Local-currency sales increased 1 per cent.
Margins benefited from purchasing improvements, cost controls and one-off tariff effects.
Logistics disruption increased goods in transit, while digital upgrades and in-season buying remained priorities.
September sales were expected to rise 1 per cent.
“Our work – especially within purchasing, cost control and more efficient operations – has contributed to a more profitable business. Although sales developed in a positive direction during the quarter, we see further potential to increase sales going forward,” said Daniel Ervér, chief executive officer, H & M Hennes & Mauritz AB.
Tariff effects support margin improvement
The gross margin and operating margin each benefited by approximately 1.6 percentage points from one-time effects related to tariffs and goods imports that had raised cost of goods sold in earlier quarters. Operating performance also reflected continued work to improve purchasing, cost discipline and operational efficiency, H&M said in a press release.
Stock-in-trade increased YoY, primarily because of a higher value of goods in transit amid global supply-chain disruption and temporary effects from consolidation work in the European logistics network. H&M said the composition of its inventory remained good.
Digital infrastructure and in-season buying remain priorities
The group continued to advance its digital infrastructure during the quarter, aiming to improve precision across product development, purchasing, allocation, marketing and sales. It is also increasing the share of in-season purchasing, while pursuing a more optimised store portfolio, upgraded stores and a more personalised digital experience.
Looking ahead, H&M expects sales in September 2026 to increase 1 per cent in local currencies from a year earlier. The company said in its nine-month report that it was focused on strengthening its customer offering amid high living costs, supported by supply-chain initiatives, artificial intelligence and a simplified organisation.
Fibre2Fashion News Desk (SG)
