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H&M posts surprise Q1 operating profit despite weak demand amid soaring inflation


H&M, the world's second-largest fashion retailer, has reported a surprise operating profit of 725 million Swedish crowns ($69.73 million) for the December-February quarter, despite weak demand due to soaring inflation.

This figure comes as a surprise to many, considering that analysts in a Refinitiv poll had predicted a loss of 1.10 billion crowns. H&M has credited the earnings boost to the consolidation of its second-hand platform, Sellpy, which contributed approximately 1 billion crowns to the company's earnings.

Although the company has shown signs of controlling its costs, it is still struggling to compete with major rival Inditex, which owns brands such as Zara. While Inditex has been successful in luring customers back to in-person shopping after the pandemic, H&M's cost-conscious base has been reluctant due to inflation eating into purchasing power.

Despite the unexpected operating profit, H&M's first-quarter revenue, published on March 14, was worse than expected, with sales increasing only slightly and missing most estimates. However, the company still faces challenges in competing with its rivals and keeping up with changing consumer behavior.


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