H&M Surpasses Q1 Profit Expectations, March Sales Rise 1%

• Operating profit rose to 1.51 billion crowns, beating the analyst consensus of 1.39 billion crowns, marking the third consecutive quarter of profit growth despite a 1% organic sales decline
• CEO Daniel Erver cited well-received spring collections for driving positive sales trends that continued into March, with local-currency sales up 1% that month
• The company maintains supply chain flexibility with low air freight dependence to adapt to Middle East tensions, including the closure of the Strait of Hormuz, though Middle Eastern markets account for only a small portion of sales through franchise partners

H&M Q1 Profit Beats Expectations; March Sales Edge Higher

Swedish fashion retailer H&M reported first-quarter operating profit that exceeded analyst expectations, while March sales showed modest growth amid ongoing geopolitical concerns.

Key Financial Results:

• Q1 operating profit: 1.51 billion Swedish crowns ($162 million), up from 1.20 billion year-over-year
• Beat analyst consensus of 1.39 billion crowns (LSEG poll)
• Organic sales declined 1% for the quarter (December-February period)
• March sales increased 1% in local currencies
• This marks the third consecutive quarter of rising operating profit

Performance Drivers:

CEO Daniel Erver attributed the positive trend to well-received spring collections that gained traction toward quarter-end and continued into March. The quarter included the critical Christmas shopping period. H&M had previously reported a 2% decline in local-currency sales for the first two months of the quarter in January.

Market Risks:

H&M is closely monitoring Middle East developments following February 28 coordinated U.S.-Israel strikes against Iran. Subsequent Iranian retaliation has effectively closed the Strait of Hormuz, disrupting global supply chains and driving energy costs higher. However, the company emphasized:

• Strong supply chain flexibility with low air freight dependence
• Middle Eastern markets represent minimal sales exposure
• Regional operations conducted through franchise partners

Competitive Context:

H&M competes directly with Spain's Inditex (Zara parent) in the fast-fashion sector. The retailer's ability to navigate geopolitical headwinds while maintaining profitability growth signals operational resilience despite macroeconomic challenges.