H&M Q3 operating profit rises to 6.04 billion crowns, beating forecasts despite sluggish sales

Third-quarter profit beats market estimates

Swedish fast-fashion retailer H&M reported operating profit of 6.04 billion Swedish crowns ($608.63 million) for its fiscal third quarter covering June to August 2026. The result represented an increase from the 4.91 billion crowns generated during the same period a year earlier. The operating figure exceeded the mean forecast of 5.14 billion crowns compiled in an LSEG poll of financial analysts. Net profit climbed 27.6% year on year to reach nearly 4 billion crowns (354 million euros). Company leadership attributed the earnings rise to strict cost discipline and operational efficiency across its retail brands, which include Cos, Weekday, and & Other Stories.

Modest sales recovery and operational adjustments

Net sales for the three-month period rose to 57.19 billion crowns (5.07 billion euros or 4.4 billion pounds), compared with 57.02 billion crowns in the third quarter of 2025. Measured in local currencies, revenue increased by 1% year on year. This positive performance followed a 3% contraction in net sales during the first half of the financial year. The quarterly revenue gain occurred alongside a 2% year-on-year reduction in total store locations. Chief executive Daniel Ervér explained that the company is adjusting purchasing strategies to align more closely with consumer demand.

At a time when consumers are affected by high living costs, we are gradually strengthening our customer offering through attractive and inspiring products, shopping experiences and brands.

Gross margin expansion and tariff refunds

Gross profit reached 30.87 billion crowns (2.74 billion euros), up from 30.14 billion crowns in the third quarter of 2025. The retailer's gross margin widened to 54.0%, improving from 52.9% recorded in the comparative period. That margin increase was aided by roughly 1.6 percentage points from one-off customs duty effects and imported merchandise adjustments, specifically refunds of United States tariffs that had elevated costs in prior quarters. Selling and administrative expenses declined 1% to 24.83 billion crowns (2.20 billion euros), compared to 25.17 billion crowns a year prior. Investor relations representatives stated during an analyst call that the company expects no further positive tariff adjustments in the second half of the financial year.

Stock market drop and fourth-quarter outlook

Despite the operating profit beat, H&M shares fell by nearly 3% on the Stockholm stock exchange following the publication of the results. Market participants focused on the modest 1% revenue growth, which reflected persistent pressure on customer spending. For the ongoing fourth quarter, H&M announced that September 2026 sales are projected to grow 1% in local currencies compared to the previous year. The management team stated that it is increasing the proportion of in-season purchasing while leveraging artificial intelligence to streamline inventory management and supply chain logistics.

Initiatives in the supply chain, greater support from AI and committed employees allow us to increase relevance and precision throughout the business - which will help deliver even greater value for our customers.