Global supply chain disruptions due to conflict in the Middle East, and logistics woes in Europe stymied third-quarter growth at H&M, where net sales remained broadly flat at 57.19 billion Swedish kronor, or 5.07 billion euros, while sales in local currencies rose 1 percent compared with the corresponding quarter last year.
The parent of brands including H&M, Cos, Arket and & Other Stories, said it was trading with 2 percent fewer stores during the three-month period ended Aug. 31, part of a wider strategy by chief executive officer Daniel Ervér to tighten operations and increase the Swedish retailer’s speed-to-market.
Despite the lackluster sales, profits continued to rise as Ervér’s efficiency plan takes hold. Operating profit in the period rose 23 percent to 6.04 billion kronor, or 535.3 million euros, while profit after tax was up 28 percent to 4.10 billion kronor, or 363.4 million euros.
Ervér said H&M’s work, “especially within purchasing, cost control and more efficient operations – has contributed to a more profitable business. Although sales developed in a positive direction during the quarter, we see further potential to increase sales going forward.”
He said the summer collections were “well received and contributed to better sales development, particularly towards the end of the quarter. At the same time, sales were affected by, among other things, continued disruptions in the logistics network in Europe and in the global supply chain.”
Ervér noted that operating profit included the positive one-time effect related to tariffs and goods imports in the previous year, while operating margin for the last 12-month period increased to 9 percent. He said the main driving forces behind the improved profitability over the past year have been H&M’s work on “purchasing, cost control and more efficient operations.”
The company said H&M group sales in September, a month that saw the Cos and H&M runways disrupted by PETA protestors, are expected to increase by 1 percent in local currencies compared with the same month the previous year.
The company added the cost of markdowns as a percentage of sales in the fourth quarter of 2026 is also “expected to increase somewhat, compared with the corresponding quarter the previous year.”
The group said it is closely monitoring developments in the Middle East and the implications for global trade. “With good flexibility in the supply chain and a low proportion of air freight, there are opportunities to adapt flows of goods to changed conditions,” H&M said.
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