How H&M is reigniting sales after “challenging start”

H&M Group, the retail giant that boasts a portfolio of H&M, & Other Stories, COS, Arket and more, has revealed that its net sales for Q3 of 2024 (1 June – 31 August) remained flat at £4.35 billion (SEK 59 billion).

For the third quarter, gross profit amounted to £2.21 billion (SEK 30 billion) and operating profit totalled £260 million (SEK 3.5 billion). Excluding currency translation effects and winding-down costs the operating margin was comparable with the previous year.

As for the nine months up until 31 August, net sales amounted to £12.6 billion (SEK 172 billion). In terms of local currencies, net sales were flat compared with the previous year.

Gross profit increased to £6.7 billion (SEK 91 billion) and operating profit increased to £880 million (SEK 12 billion).

Despite the "challenging start" H&M’s new initiatives to reignite the brand are set to boost sales. In September, a number of initiatives have been set in motion. This includes upgrades to physical stores, the roll-out of a new digital experience, and the launch of the autumn collection with brand-reinforcing events.

Daniel Ervér, CEO at H&M, said: "Despite a challenging start, we are concluding the third quarter with sales on par with last year in local currencies and with good cost control. We are strengthening the H&M brand by investing in products, the shopping experience and marketing, which we are already seeing start to make an impact and which will contribute to increased sales and profitability."

In addition, H&M's global expansion is well underway with the first flagship store for H&M Beauty in Sweden opening in September. During the autumn H&M is also opening digital stores on Douyin and Pinduoduo, two of China’s biggest e-commerce platforms, and the first H&M store in Brazil will open in São Paulo at the end of 2025.

However, looking ahead, the company has dropped its 2024 profit margin target after costs and fierce competition hit operating profit in the third quarter. This sent shares of the world's second-largest listed fashion retailer down by 8%.

Ervér added: "At present, we estimate that this year's operating margin will be below 10%.

"2024 is a year in which we’re laying the foundation for future growth. We’re increasing the pace of improvements in our customer offering and deprioritising things that don’t strengthen our brands or contribute to our sales and profitability."