H&M Group, the Swedish fast fashion powerhouse, released its Q2 2025 financial result, revealing a decline in both sales and profits. However, CEO Daniel Ervér remains confident in the company’s strategic direction, citing robust growth in select segments like H&M Move, womenswear, and especially the standout performance of premium brand COS.
Sales Down, Outlook Stable
From March to May, H&M’s reported net sales fell to SEK56.7 billion (~US$6 billion), down from SEK59.6 billion year-on-year. Operating profit also dipped to SEK5.9 billion from SEK7 billion, and net profit declined to SEK3.9 billion compared to just over SEK5 billion during the same quarter last year. The gross margin dropped to 55.4%, impacted by currency headwinds, elevated freight costs, and a stronger US dollar.
Despite the downward trend in SEK terms, H&M delivered a modest 1% increase in local currency sales, which is notable given the retailer operated with 4% fewer stores. Excluding the impact of closures, adjusted sales rose 3%, showcasing the company’s resilience and improving efficiency in a challenging retail environment.
CEO Focuses on Strategic Progress and Future Growth
CEO Daniel Ervér struck an optimistic tone during the earnings call, stating:
Our plan, with its focus on the product offering, the shopping experience, and brand, is again confirmed by the progress we see.
Daniel Ervér, CEO of H&M Group
He pointed to notable growth in key segments, especially H&M womenswear and H&M Move, which have outperformed in recent quarters. Perhaps most significantly, COS, one of H&M’s lesser-highlighted portfolio brands, received special mention for its exceptional growth trajectory.
Portfolio brands also grew in the quarter and COS has developed particularly well, emphasizing a broader shift toward premium and design-led offerings.
Daniel Ervér, CEO of H&M Group
Brazil Expansion and June Sales Growth
H&M is poised for further international expansion, with new store openings and online launches in Brazil scheduled for early H2 2025. This marks a significant strategic milestone, tapping into a market of over 200 million consumers.
June is also shaping up positively, with the company expecting a 3% year-on-year sales increase in local currencies, even factoring in a 1% negative calendar effect.
Additionally, the company expects external pressures like freight and sourcing costs to ease in the second half, which could help improve margins.
Despite the lukewarm results on paper, investor confidence remained high. H&M shares rose by a few percentage points in early Thursday trading, suggesting market approval of the CEO’s long-term vision and confidence in the company’s turnaround strategy.
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