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.

• Sales decreased by 1% in local currencies, mainly due to weaker December demand, fewer stores, and continued cautious consumption in key markets; net sales for Q1 2026 were SEK 49,607m, down 10% in SEK.

• 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, organizational simplification, and continued investments in store updates and digital enhancements.

• Sustainability progress includes a 34.6% reduction in Scope 3 emissions and increased use of recycled materials, with 32% recycled share and 91% recycled or sustainably sourced materials.

Financial highlights

• Gross margin improved to 50.7% (from 49.1%), and operating margin rose 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 and omnichannel expansion contributed positively to EBIT margin expansion, 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; CapEx planned at SEK 9-10 billion.

• Efficiency in marketing spend expected to continue throughout the year.