Hennes & Mauritz (HM) Q1 2025 earnings summary

Executive summary

• Net sales rose 3% year-over-year to SEK 55,333m, with 2% growth in local currencies despite a 3% reduction in store count.

• Focused on long-term profitable and sustainable growth, prioritizing organic growth through the H&M brand and improvements in price offering, shopping experience, and brand strength.

• Online sales performed well, accounting for about 30% of total sales; store portfolio optimization continued with 40 net closures in Q1.

• CEO highlighted progress in women's assortment and ongoing omni-channel integration, with upgrades to both digital and physical stores.

• Portfolio brands saw 2% net sales growth in SEK, flat in local currencies; second-hand platform Sellpy delivered very strong sales.

Financial highlights

• Operating profit for Q1 was SEK 1.2 billion, with margin down to 2.2% (3.9%) due to a weaker gross margin from negative external factors and increased markdowns.

• Gross margin declined to 49.1% (51.5%), impacted by currency effects, higher markdowns, and investments in the customer offer.

• Inventory increased by 9% in SEK year-over-year, mainly due to higher purchasing costs and extended transport lead times.

• Cash flow from operating activities increased to SEK 4,201m (3,967); cash and equivalents plus undrawn credit facilities totaled SEK 34,470m (38,710).

• March sales expected to increase by 1% in local currencies.

Outlook and guidance

• Negative effects on gross margin from external factors and markdowns expected to be significantly smaller in Q2 versus Q1, with positive effects anticipated in H2 2025.

• Easing of shipping costs anticipated to help mitigate currency headwinds, with positive effects expected towards the end of Q2 and into the second half.

• Board proposes a dividend of SEK 6.80 per share in two installments and seeks authorization for share buybacks until the 2026 AGM.

• Focus remains on upgrading store portfolio, enhancing digital and physical experiences, and strengthening the brand.

• Inventory composition is considered healthy and well-positioned for spring and summer.