Hennes & Mauritz stock slipped 3.8% to trade at 162.4 SEK after the Swedish fashion group released its fiscal second-quarter results, which included a profit and revenue shortfall that unsettled investors.
For the March–May period, operating profit was reported at SEK 5.91 billion, unchanged from the prior year but below the analyst consensus of SEK 6.38 billion compiled by LSEG. Net sales for the quarter reached SEK 54.83 billion, down from SEK 56.71 billion in the same quarter a year earlier.
In a statement, CEO Daniel Ervér said the quarter’s sales came in somewhat lower than planned. He noted that improvements in profitability and higher inventory productivity aligned with the company’s long-term objectives, but added that the tighter inventory management had in some cases limited H&M’s ability to fully satisfy customer demand.
The company also recorded restructuring costs of SEK 679 million in selling and administrative expenses tied to organisational changes across its sales markets and central sales organisations. The charge was presented as part of efforts to implement the planned changes.
Looking ahead, the H&M group said sales in local currencies for June 2026 are expected to be on par with the same month a year earlier. That outlook offered little in the way of reassurance to investors seeking signs of a clearer sales recovery.
Analyst sentiment on the stock remains notably cautious. The average 12-month price target for H&M B among tracked analysts is SEK 156.1, and 12 of 13 analysts in that group recommend a Sell on the shares.
H&M continues to operate under a structural squeeze in its market positioning. The company faces intense price competition from fast-fashion rivals offering very low price points, while also contending with the relatively premium stance of Inditex’s Zara. That dynamic has constrained H&M’s ability to raise prices as more cost-conscious shoppers remain reluctant to increase spending.
The broader competitive environment, together with soft consumer confidence in key European markets, has weighed on the company’s top-line momentum. Market context provided little support on the day of the results release - global equity markets were mixed and U.S. indices did not deliver a clear tailwind for European consumer-facing names. The OMX Stockholm 30 Index serves as the primary benchmark for this Stockholm-listed stock.
These factors - a below-consensus earnings print, the one-off restructuring charge, a muted near-term sales outlook, and a predominantly negative analyst stance - combined to push H&M shares to a session low of 161 SEK. That low was well below the stock’s opening price of 167 SEK and left the shares trading near the lower end of their recent range.
Summary
Hennes & Mauritz posted a March–May operating profit of SEK 5.91 billion, missing the SEK 6.38 billion analyst consensus, while net sales declined to SEK 54.83 billion from SEK 56.71 billion a year earlier. Management pointed to tighter inventory controls that improved productivity but constrained sales in some instances, and the firm booked SEK 679 million in restructuring costs. June sales in local currencies are expected to match the prior year’s level. Analyst coverage remains bearish, with an average 12-month price target of SEK 156.1 and 12 of 13 analysts recommending Sell.
Key points
- H&M missed operating profit expectations for the March–May quarter - operating profit was SEK 5.91 billion versus a SEK 6.38 billion consensus.
- Net sales fell to SEK 54.83 billion from SEK 56.71 billion year-on-year, and the company expects June sales in local currencies to be broadly unchanged versus the prior year.
- The retail and consumer discretionary sectors, particularly European apparel retailers and equity markets, are affected by the results and the cautious investor reaction.
Risks and uncertainties
- Near-term sales risk - management signalled that tighter inventory management has, in some cases, limited H&M’s ability to meet demand, which may continue to weigh on top-line performance in the short term. This affects retail and supply chain stakeholders.
- One-off and implementation costs - a SEK 679 million restructuring charge was recognised as the company implements organisational changes, introducing execution risk and temporary pressure on reported expenses in the retail sector.
- Market and competitive risk - the ongoing squeeze between very low-priced fast-fashion competitors and the premium positioning of peers like Zara, combined with soft consumer confidence in key European markets, continues to constrain pricing power and revenue growth for apparel retailers.
Tags: retail, apparel, europe, earnings, stocks