H&M Reports Sluggish Start to Spring Sales
H&M Reports Sluggish Start to Spring Sales
H&M, the Swedish fast-fashion retailer, reported a weaker-than-expected performance for the first quarter of 2025. Sales for the December to February period rose by just 2% in local currencies, reaching 55.3 billion Swedish crowns ($5.52 billion), falling short of analysts’ expectations of 55.9 billion crowns. March sales growth was even slower, at just 1%, compared to a 4% increase in the same period last year.
Key Financial Figures
- Q1 Sales: 55.3 billion Swedish crowns ($5.52 billion), up 2% year-on-year.
- Operating Profit Margin: Fell to 2.2% from 3.9% a year ago.
- March Sales Growth: Only 1%, compared to 4% in March 2024.
CEO’s Perspective
CEO Daniel Erver acknowledged the challenges, stating, “Even if we are taking important steps, we are not satisfied with our result in the first quarter. We are still in a high inflation climate where the customers’ spending power is limited, so we stay very focused on providing outstanding value for money.”
Erver, who has been leading H&M for over a year, emphasized the company’s efforts to revamp its brand through better marketing and more fashionable clothing. Recent campaigns have featured pop stars like Charli XCX, Tyla, and FKA Twigs to make the brand more appealing and competitive against rivals like Zara and Shein.
Market Performance
H&M’s shares have dropped 11% since the start of the year, with a 1% decline in early trading following the Q1 report. Sales were weaker in key markets like the U.S., the Nordics, and the UK, while Germany and Poland showed better performance. The company is also considering price hikes in the U.S. to offset import tariffs.
Looking Ahead
Despite the challenges, H&M is optimistic about the future. Erver noted that the impact of marketing investments on profitability would be smaller in the second quarter. Additionally, improvements in the womenswear product line are already showing positive results.
H&M continues to streamline its operations, reporting its smallest store footprint since 2016, with 4,213 stores globally. The company remains committed to providing value and adapting to market conditions.
Conclusion
H&M’s Q1 2025 performance highlights the ongoing challenges in the retail sector, from inflation to changing consumer preferences. As the company invests in marketing and product improvements, it aims to regain its competitive edge in the fast-fashion industry.
Source: Reuters
