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 product, 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.

• Strong sales growth in the second-hand platform Sellpy and positive momentum in women's wear and online channels.

Financial highlights

• Operating profit for Q1 was SEK 1,203m, 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 higher purchasing costs, increased markdowns, and investments in customer offering.

• Inventory increased by 9% in SEK compared to the previous 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).

• Result after tax was SEK 579m (1,231), and EPS was SEK 0.37 (0.77).

Outlook and guidance

• Negative effects from external factors, markdowns, and investments are expected to be significantly smaller in Q2 compared to Q1.

• Shipping costs and other negative external factors are expected to ease towards the end of Q2 and into the second half of the year.

• March 2025 sales expected to increase by 1% in local currencies year-over-year.

• 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 cost control and maintaining a robust financial position amid macroeconomic and geopolitical uncertainty.