Hennes & Mauritz (HM) Q1 2026 earnings summary

Executive summary

• Profitability improved despite cautious consumer sentiment and significant currency translation effects, with a rolling twelve-month operating margin rising to 8.4% from 7.0% year-over-year.

• Net sales for Q1 2026 were SEK 49,607m, down 10% in SEK and 1% in local currencies year-over-year, impacted by a stronger Swedish krona and a 4% reduction in store count.

• Positive reception of spring collections led to improved sales in February and March, with March sales expected to rise 1% in local currencies year-over-year.

• Strategic focus on product, customer experience, and brand, supported by cost control and operational efficiency.

• Sustainability progress includes a 34.6% reduction in Scope 3 emissions in 2025 and increased use of recycled materials, with 32% recycled materials in products for 2025.

Financial highlights

• Gross margin increased to 50.7%, and operating margin improved to 3.0% from 2.2% year-over-year.

• Inventory productivity reached its highest level in 10 years relative to sales, with stock-in-trade down 16% to SEK 34,608m.

• SG&A is targeted to grow at a low single-digit rate in local currencies for 2026.

• Depreciation costs remain low due to reduced investment during COVID years.

• Online business contributed positively to EBIT margin expansion year-over-year, with over 30% of sales online.

Outlook and guidance

• Financial outlook for the year remains unchanged, with external factors expected to have a somewhat positive effect on gross margin in Q2.

• No intention to push gross margins beyond normalized levels of 54%-55%.

• Cost of price reductions/markdowns as a percentage of sales expected to be higher than last year, with selective use of temporary promotions.

• Platform investments and tech infrastructure upgrades will increase cost pressure in the second half of the year.

• March 2026 sales expected to increase by 1% in local currencies year-over-year.