Swedish fashion giant H&M reported a slightly stronger profit during Q2, FY25 ending June 30, 2025, signaling positive momentum as Daniel Erver, CEO worked to attract more shoppers with trendier clothing. The world's second-largest publicly traded fashion retailer also projected a 3 per cent rise in sales during the quarter, a welcome improvement compared to a 6 per cent decline during the same period last year.
The brand’s collections are more on trend, more fashionable, and have received more customers’ appreciation strong throughout this quarter, states Erver. Gingham and check patterned dresses, blouses, and skirts have been particularly popular this season, a trend expected to continue into autumn, he adds. Additionally, fueled by a rising demand on the social media, sales of accessories like bags and sneakers have increased.
In the US, where H&M operates around 500 stores, there is a significant drop in consumer sentiment due to the turbulent tariff situation following President Donald Trump's increased import duties, notes Erver. This has led competitors to raise prices. Primarily sourcing products from China and Bangladesh, H&M focuses on maintaining competitive pricing, as consumers remain highly price-sensitive amidst economic uncertainty in the US and globally, he adds.
In the March-May quarter, H&M's sales declined to 56.7 billion Swedish crowns ($5.99 billion), from 59.6 billion a year ago, narrowly missing LSEG analysts' forecast of 57.0 billion crowns.
Earlier this month, Zara owner Inditex also reported disappointing sales, indicating a broader consumer pullback from apparel spending as US tariffs introduce risks to global economic growth.
Despite the slight sales dip, H&M's Q1 operating profit rose to 5.91 billion crowns, surpassing analysts' forecast of 5.88 billion. While the operating profit margin decreased to 10.4 per cent from 11.9 per cent last year, it still exceeded analysts' fears.
H&M noted strong performance from its higher-priced brand, COS, and observed that shoppers are generally opting for more medium and high-priced items, contributing to improved profitability. However, highly competitive summer markdowns across the market led to increased discounting in Q1, FY25, Erver adds.
Even as it reduces its global store footprint, H&M is actively seeking growth in new markets with expanding middle classes. The company plans to open its first stores in Brazil in the second half of the year, alongside expansions into El Salvador and Venezuela, with a launch in Paraguay anticipated next year.
