H&M’s profit jumps 38% despite modest sales growth

H&M delivered a sharp rebound in profitability in the fourth quarter, proving that "strengthened customer offering, good cost control and improved inventory productivity" is beginning to pay off, even if sales growth remained modest.

In the three months to 30 November 2025, sales rose 2% in local currencies. In Swedish krona, however, sales fell to SEK 59.2 billion (£4.85 billion).

Operating profit jumped 38% to SEK 6.36 billion (£520 million), lifting the operating margin to 10.7% from 7.4% the year prior. Selling and administrative costs fell 3% in local currencies, while inventory declined 12% year-on-year.

For the full year to 30 November 2025, sales rose 2% in local currencies, with operating profit increasing to SEK 18.4 billion (£1.51 billion). Net profit reached SEK 12.1 billion (£990 million).

CEO Daniel Ervér said: "Through a strengthened customer offering, good cost control and improved inventory productivity, we continue to take important steps towards all our long-term targets in a challenging environment."

"Our work in 2025 has gradually contributed to positive development towards all our long-term targets. The sales trend is positive seen over the year as a whole, and earnings have strengthened in the second half of the year."

Behind the numbers is a quieter but material operational shift. H&M has shortened decision paths, accelerated trend capture and tightened supplier collaboration.

The group has also continued to invest in the customer experience, upgrading both digital platforms and physical stores, while using designer collaborations to rebuild cultural relevance. Recent highlights include a collaboration with Glenn Martens and the announcement of a Stella McCartney partnership scheduled for 2026.

Looking ahead, sales from December through January are expected to fall 2% in local currencies.